Crude Oil trading below USD 65 the culprint of KLCI tumbled

Probably the worry is the budget was base on higher oil price perhaps around USD 90 – 100. Dropping oil price means we may short of budget plus weakening RM may dampen surplus.

We believe logically there are certain impacts but also may come back with certain advantages. Businesses may grow further due to lowering cost contribute back to the pool of taxes. As long as crude oil trade above USD 60. We do not see any major issue but if continue to drop below USD 60 may trigger threats. But OPEC will also wont allow oil price to continue drop to below USD 50 which is a level unseen for many years.

We don’t foresee a huge issue but start to remain cautious on oil. But we may take opportunity to buy into our top picks or heavily beaten down stocks.

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