KUALA LUMPUR (Jan 16): A 25-basis-point (bps) cut in Bank Negara Malaysia's overnight policy rate (OPR) is likely to happen in the second half of 2020 (2H20), according to Manulife Investment Management (M) Bhd.

At its 2020 Malaysia Outlook, the company's head of fixed income Andy Luk said the rate cut is likely to take place take place in the latter half of this year if economic growth is not as expected.

Meanwhile, the central bank is unlikely to cut the OPR, which is currently at 3%, at its monetary policy committee meeting next week.

On the issue of the ringgit, Luk said market consensus pegs the currency at around RM4 to RM4.20 against the US dollar, and noted that the ringgit is likely to outperform the greenback.

He added that currently, the yields of Malaysian Government Securities are more attractive than those of US Treasury bills.

Luk also noted that an estimated outflow of RM20 billion to RM25 billion from the local bond market could occur if Malaysian bonds are excluded from the FTSE World Government Bond Index (WGBI) come the next review in March 2020.

However, the market is deep and large enough to absorb the outflow, he added.