RINGGIT EXPECTED TO STABILISE IN H2
HSBC also sees Malaysia on solid growth path with GDP expanding 5.5pc this year
HSBC expects the ringgit to stabilise against the US dollar in the second half of this year and strengthen to 4.28 by the end of the year.
HSBC global private banking and wealth chief investment officer for Southeast Asia, James Cheo, said the ringgit would strengthen when global market sentiment improved.
“The first half of this year had been volatile and we believe that the ringgit will stabilise towards 4.28 by the end of the year when the global market sentiment improves,” he said during a briefing on HSBC’s investment outlook for the second half of the year yesterday.
Cheo said HSBC observed that equity inflows from foreign investors had continued to trickle in year-to-date, in view of Malaysia’s growth recovery and reopening of its borders to international travellers.
Cheo said he expected Bank Negara Malaysia to increase the Overnight Policy Rate (OPR) by another 50 basis points to 2.5 per cent this year.
He also said Malaysia was on a solid growth path with an expected gross domestic product (GDP) growth of 5.5 per cent this year, which he attributed to a strong manufacturing sector performance and higher commodity prices.
“Domestic demand should accelerate this quarter and next, supported by a tightening labour market,” he added.
Meanwhile, HSBC global private banking chief investment officer for Asia, Fan Cheuk Wan, expects the global economic cycle to continue but at a slower rate and for inflation to ease gradually.
The United States interest rate hike expectations would be moderating in the second half despite lingering energy shock and supply chain disruptions, she said.
“We forecast global GDP growth to decelerate to 3.4 per cent this year and 2.9 per cent next year, down from 5.8 per cent last year.
“We expect global energy shock and supply chain challenges to push up global inflation to 7.5 per cent this year before moderating to 5.1 per cent next year.”
She added that the world had faced several structural shocks and investors needed to reposition their portfolios to adapt to these challenges.
“The Covid-19 pandemic, Ukraine-Russia war and sustainability revolution are disrupting supply chains, labour markets, energy sources and infrastructure.
“These changes will require significant investments that will ultimately help boost growth, but will push up costs and cause inflation to become stickier than witnessed in the past decade.
“Therefore, we expect the investment outlook for risk assets to gradually improve in the second half of this year with support of a soft-landing for the global economy and easing stagflation fears,” she added.