KUALA LUMPUR (April 5): Foreign demand for Malaysian stocks may continue to be a key investment theme as a strengthening ringgit takes the spotlight.

The ringgit has strengthened against the US dollar after the US Federal Reserve Chair Janet Yellen said the central bank should be cautious in its interest rate hike assessment.

Higher US rates do not bode well for Asian markets in anticipation of funds flowing back to US dollar-based assets. Under the current sentiment, a strengthening ringgit may direct investors' attention to liquid Malaysian stocks with high foreign shareholding.

Yesterday, the FBM KLCI rose 14.69 points or 0.9% to close at 1,725.24.

The ringgit strengthened to its firmest intraday level against the US dollar at 3.8595. At 5pm, the ringgit weakened to 3.9005.

Over the last month, the ringgit was traded at 3.9930 versus the US dollar on March 23 before strengthening to current levels.

In overnight US shares trades, the Dow Jones Industrial Average fell 0.31% while S&P 500 dropped 0.32%. Nasdaq Composite declined 0.46%.

Crude oil prices fell. Brent oil fell 98 US cents or 2.5% to US$37.69 a barrel while US oil declined US$1.09 or 3% to US$35.70.

Reuters reported that oil prices fell on Monday as investors doubted that producing countries will freeze output to rein in a worldwide glut.