Ringgit softness may persist towards RM4.23-4.28 levels, says HLIB

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KUALA LUMPUR (Oct 1): Hong Leong Investment Bank (HLIB) said in wake of the prevailing risk-off sentiment, the appetite on dollar assets has strengthened, as worries that negotiations between the US-China on 10-11 Oct will not lead to a “complete” trade deal, possibility of a no-deal Brexit, excessive financial market volatility and lingering geopolitical tensions, coupled with deepening political turmoil in the US after the start of an impeachment inquiry into Trump.

In a technical tracker today, HLIB said on the ringgit (MYR) outlook, despite abating risk of WGBI exclusion for now (pending further review in March 2020), the greenback strength and Bank Negara Malaysia’s easing bias (HLIB forecast a 25 basis points OPR cut within the next 6 months and keeps a 4.15-4.20 range/USD), USDMYR is expected to move alongside USDCNY (also on weakening tone) towards RM4.23-4.28 territory in the next 3-6 months (technical view). 

“Given the weak ringgit undertone, we reckon that export plays could return.

“HLIB top picks are Top Glove Corp Bhd (Buy: TP RM5.31, DY: 2.3%) and Lii Hen Industries Bhd (Buy: TP RM4.22, DY: 5.3%),” it said.