KUALA LUMPUR: The ringgit is expected to ease 10% to 15% against the US dollar next year as the rally in the greenback continues, said Citi Research managing director and equity strategy regional head Markus Rosgen.

“We foresee the US dollar rally to continue next year, strengthening about 10% to 15% against the ringgit,” he told a media conference yesterday.

The ringgit has weakened against the US dollar since late August this year at 3.15 to around 3.35.

Against this backdrop, Rosgen sees companies or equities with exposure to the US market to be favourable.

“Unfortunately, most of these companies tend not to be [found] in the Southeast Asia region. We can find more of these companies in countries such as Hong Kong, China and South Korea,” he added.

Rosgen said Citi Research prefers the banking, technology and consumer discretionary sectors over the energy, and oil and gas sectors.

Rosgen believes Malaysian equity valuations are no longer “cheap” compared with those of some of its Asian peers such as Thailand, the Philippines, India, and Indonesia.

“Our view on Malaysia’s equity market is mostly aligned with consensus, which is underweight, compared with some of its Asian peers where investors can make more money from investing in them,” he said.

Rosgen added that the local equity market requires a structural reform to serve as a catalyst to attract investments from around the world.

However, he said, so far none of the fund managers or investors he had met around the world have observed any domestic reforms in Malaysia.

This article first appeared in The Edge Financial Daily, on November 27, 2014.