Bank Negara Malaysia is expected to initiate a gradual tightening of interest rates in the 2H2022 with inflation trending higher due to improved labour market condition, a spokesperson from HSBC said.
Chief Investment Officer for Asia, Global Private Banking and Wealth at HSBC, James Cheo said that it expects a total of 100 bp rate hikes over 2022 and 2023.
“We have recently upgraded Malaysian equities from mildly underweight to neutral. But with the reopening and recovery in place, we expect Malaysian equities to fare better. We think that the KLCI is likely to end the year at 1590”, said Cheo in a media briefing
On the Malaysian economy, Cheo said that its high vaccination rate and the robust external engine will allow the economy to recover and reopen. “Malaysia has opened its borders we expect Malaysia’s economy to accelerate and grow Dy 5.6% in 2022,” he said.
He said that fiscal policy is expected to remain expansionary in 2022 with a budget deficit target of 6.0% of GDP, compared to a targeted deficit of 6.5% in 2021.
On Malaysian equities, Cheo said that it has recently upgraded Malaysian equities from mildly underweight to neutral. “But with the reopening and recovery in place, we expect Malaysian equities to fare better. We think that the KLCI is likely to end the year at 1590”, adds Cheo,” he said
