KUALA LUMPUR (July 12): Hong Leong IB Research said it expects the ringgit (MYR) to range bound in 2H16 mainly on US$ strength, weak local corporate earnings outlook and narrowing trade surplus.
In a 2H16 economic outlook today, the research maintained its MYR forecast range at RM4.00-4.20/US$ in 2H16.
It expects weak global growth trend to continue as downside risks remain high.
“Our global growth forecast is trimmed to 3.0%, the slowest pace since global financial crisis era.
“Despite slower GDP growth of 1.9% in 2016, US growth outlook is still decent, supported mainly by an expected pick-up in consumption on account of favourable labour market. We expect FOMC to hike once (25 basis points) in Dec 2016,” it said.
The research house said it expects China to arrest growth slowdown in 2H16 riding on an expansionary fiscal stance with additional monetary tools at disposal.
“For Malaysia, we expect stabilisation of growth in 2H16 after a soft patch in 2Q16, mainly supported by modest consumption recovery and robust construction.
“We maintain our 2016 GDP growth forecast at 4.2%,” it said.
HLIB Research said it expects current account surplus to taper in 2H16 affected by diminishing currency translation gain and higher capital imports amid slower global growth.
“Bank Negara Malaysia (BNM) to stand pat on overnight policy rate despite higher risk of undershooting BNM’s growth target,”: it said.