The US withdrawal from the Trans-Pacific Partnership (TPP) could pave the way for bilateral trade negotiations between Malaysia and the world’s largest economy, an economist said.
Affin Hwang Investment Bank Vice-President/Head of Retail Research Nazri Khan Adam Khan said there were areas where Malaysia and the US could work together, such as finance and Islamic finance.
“There might be dismantling of open trade, but I’m sure it’s not game over for Malaysia.
“I believe there might be bilateral trade negotiations between Malaysia and the US, and we need to capitalise on that,” Bernama reported as he told reporters after attending the 19th Malaysia Strategic Outlook Conference 2017 in Kuala Lumpur today.
Nazri said while there was still a lot of uncertainty over US policies due to the lack of details being announced, some of the policies had been forecast and could provide some directions to investors.
“There will be huge infrastructure spending and Donald Trump will be focusing more on domestic trade.
“We will see a lot of tax cut being given to multinational companies to bring back investments into the US. From there we will be able to know what will happen in the future,” he said.
On the local equity market, he said the market was expected to be influenced by the movement of ringgit, as well as selective play in real estate, infrastructure and financial counters.
“Stock goes up when ringgit comes down, but the overall target for the FTSE Bursa Malaysia KLCI index is 1,760 by end of the year,” he said.
On the ringgit, Nazri said the local currency is projected to strengthen to RM4.10 against the US dollar by year-end.
However, he said the ringgit would remain under pressure in the near term following an announcement by the US Federal Reserve of another three rounds of interest rate hike in the US.
Nevertheless, Nazri said the stabilising crude oil, which saw Brent Crude rising to US$57 per barrel, would further improve market sentiment.
“The Organisation of Petroleum Exporting Countries meeting in March would provide more catalysts to the oil price,” he said.