Local Market Continues Weak Into Third Quarter

<p>&nbsp;Hong Leong Investment Bank (HLIB) Research expects the market to remain weak until the third quarter.</p><p><br /></p><p>This follows the uncertainty that may be triggered by the upcoming state elections in mid-August and the continued policy tightening cycle by the Federal Reserve (Fed).</p><p><br /></p><p>Based on HLIB's observation of the gap between the overnight interest rate (OPR) and the Fed funds rate (FFR), it sees that the ringgit and the local bourse have the potential to recover in the fourth quarter.</p><p><br /></p><p>There are also possibilities for liquidity inflows following the absence of EPF disbursements, stamp duty cuts to revive retailers and record low foreign shareholdings.</p><p><br /></p><p><br /></p><p>HLIB puts the KLCI index target for the end of this year at 1,530.</p><p><br /></p><p>The research firm also projected weaker growth in the second quarter after taking into account the effects of a reduced low base, slower global growth in 2022 and lingering geopolitical risks.</p><p><br /></p><p>As a result, gross domestic product (GDP) is forecast to grow by 4.5% in 2023 compared to the 8.7% growth recorded in 2022.</p><p><br /></p><p>In the context of interest rates, HLIB expects Bank Negara Malaysia (BNM) to remain at 3.0% for the remainder of this year.</p>