Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 18): The ringgit, which has appreciated 1.73% year-to-date against the US dollar, is still undervalued by 5% to 10%, says Nomura Asset Management Co Ltd senior managing director and chief investment officer of global equity Wataru Ogihara.

Ogihara believes while most emerging market currencies are generally undervalued based on real effective exchange rate, the ringgit has a 5% upside potential in time to come.

This is given its strong fundamentals and against the backdrop of increasing confidence in the Malaysian economy and domestic politics, he said when addressing reporters’ questions on the sidelines of an investment forum here today.

The ringgit was trading at 4.0830 against the greenback at the time of writing.

Commenting on his outlook on global corporate earnings growth, Ogihara said a downward revision is underway — with Malaysia not being an exception — given the economic slowdown and partly on the back of a high-base effect.

“In 2019, I wouldn’t be surprised if it (growth rate) goes down to zero, before eventually returning to the double-digit track… One of the reasons why I think growth is coming off is because a 20% annual growth cannot be sustained. 

“And strong earnings are connected to strong economic growth rates — seen in 2017 and 2018 — and with the [global] economy slowing down, a slowdown in corporate earnings is to be expected, [before] the economy hit bottom and bounce back in 2021, hopefully,” he added.

Ogihara said this, despite his projection that Brent crude oil will recover to the US$70-US$80 per barrel range this year, which he believes will be “positive for the Malaysian market”. 

“We used to be there six months ago; I don’t think it (returning to that level) is going to be very difficult,” he said.

Brent has recovered since hitting a low of US$50.47 per barrel on Dec 24, 2018, to trade at US$66.62 at the time of writing.

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