KUALA LUMPUR (July 31): Malaysian shares and the ringgit are expected to take the cue from US interest rate hike sentiment, which have resulted in a stronger US dollar and weaker crude oil prices.
Anticipation of US rate hikes this year does not bode well for emerging Asian markets like Malaysia as investors focus on US dollar-denominated assets.
The combined impact of a strengthening US dollar and lower crude oil prices may direct the spotlight on the weakening ringgit as the commodity forms a crucial component of the Malaysian economy.
Yesterday, the FBM KLCI rose 0.93 point to close at 1,699.92 while the ringgit weakened to 3.8190 against the US dollar.
Overnight, Reuters reported that Brent settled down 7 cents, or 0.1 percent, at US$53.31 a barrel. U.S. crude closed lower by 27 cents, or 0.6 percent, at US$48.52. The dollar rose as firm U.S. economic growth in the second quarter bolstered the chances for a rate hike by September.
Today, Malaysia's KLCI may also take the cue from index components Tenaga Nasional Bhd and Public Bank Bhd's share-trade dynamics.
This follows the announcement of Public Bank and state-controlled utility Tenaga's quarterly financials yesterday.
Tenaga said net profit fell 52% to RM789.4 million in the third quarter ended May 31, 2015 (3QFY15) from RM1.63 billion a year earlier. Revenue dropped to RM9.91 billion from RM11.5 billion.
Cumulative 9MFY15 net profit was higher at RM5.3 billion compared to RM5.11 billion a year earlier. Revenue rose to RM31.54 billion from RM31.07 billion.
Public Bank's net profit increased 13% to RM1.2 billion in the second quarter ended June 30, 2015 (2QFY15) from RM1.06 billion a year earlier. Revenue climbed to RM4.74 billion from RM4.06 billion.
For 1HFY15, Public Bank's net profit grew to RM2.37 billion from RM2.07 billion a year earlier while revenue rose to RM9.34 billion from RM8.01 billion.