Malaysia's Economy Off to a Good Start
New Strait Times , Photo Credit to Malaysian Access
clock 08-01-2018
hit 265

Malaysia's economy is off to a good start this year, with the stock market and currency breaching key levels in the first week of 2018.


Bursa Malaysia's benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) on Thursday closed above the psychological level of 1,800 points for the first time in the last three years, and yesterday added another 14.52 points to end the week at 1,817.97 points.

The FBM KLCI rallied on gains in blue chips led by Axiata Group Bhd, CIMB, Genting Malaysia Bhd, Press Metal Bhd, Genting Bhd and Sime Darby Bhd.

Dealers attributed the bullish market to strong buying momentum, growing optimism over global growth and a stronger ringgit versus the US dollar.

The local currency yesterday breached the RM4.00 level for the first time since August 2016, and was also the best performer among Asian currencies, bolstered by stronger oil prices.

The ringgit closed at 3.9960 against the greenback, or 0.2 per cent higher, from 4.0065 recorded on Thursday.

Economists expect the ringgit to gradually gain traction against the US dollar and trade in the narrow range between 3.95 and 4.0 next week.

The optimism is based on higher oil prices, positive macroeconomics outlook, better external trade performance, bullish sentiment and the weakening US dollar.

"Improved positive sentiments driven by good macroeconomic figures such as November trade data will attract foreign funds to our shores, and hence give support to the ringgit" said MIDF Amanah Investment Bank Bhd chief economist Dr Kamaruddin Mohd Nor.

Malaysia's total trade in November last year surged 14.8 per cent to RM157.05 billion compared with November 2016, according to the International Trade and Industry Ministry.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said it was not surprising if the local currency continued to appreciate as it was still grossly undervalued with long-term average standing at RM3.51.

"In fact, a technical chart suggests that it could reach RM3.98 in the immediate term. So there is always a tendency for the ringgit to go back to its mean level.”

Afzanizam said the United States Federal Open Market Committee's minutes and the recent release of US Institute for Supply Management's manufacturing index are the main factors for the ringgit's strong performance.




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