KUALA LUMPUR (July 29): A strong cabinet is good for policy decision and for Prime Minister Datuk Seri Najib Razak to push through the reforms, said TA Securities Holdings Bhd head of research Kaladher Govindan.

“In terms of policy decisions, I think it is good for the market. He [Najib] needs a strong Cabinet for him to push through his (political, economic, and social) reform agenda,” he told reporters after the annual general meetings of TA Enterprise Bhd and TA Global Bhd today.

Kaladher is of the view that Najib has done well in implementing the Economic Transformation Programme (ETP) and the subsidy rationalisation programme.

“As far as the stock market is concerned, the market likes certainty,” he said, adding that the market has taken the news well so far, with the FBM KLCI falling a marginal 10.06 points or 0.59% to settle at 1,699.70 points yesterday. The benchmark index fell a further 0.71 points or 0.04% to close at 1,698.99 today.

TA Securities’s FBM KLCI year-end target is 1,810 points.

Najib announced changes to his Cabinet yesterday, which saw his deputy and four other ministers drop. Critics have slammed the reshuffle as a means for Najib to cement his authority and to forestall an investigation into debt-ridden 1Malaysia Development Bhd (1MDB).

On the local stock market conditions, Govindan said the outlook remains “challenging” for the rest of the year with not many drivers currently and much will depend on the newsflow going forward.

He pointed out newsflow have been quite negative of late, with the slowing down of the China economy and a possible interest rate hike by the US Federal Reserve (Fed) in September.

He said unless there is a delay in the interest hike by the Fed till the end of the year rather than September, then the market will react positively.

Govindan also expects the ringgit to hover at the RM3.80 level against the US dollar for the rest of the year, but said it may fall to above RM4 against the US dollar if there is a sell-down in the bond market.

He expects the country's gross domestic product growth this year to be at 4.9%, and 5% in 2016.