KLCI should find a strong support at 1700 as it has corrected closed to 10% from its recent high. Oil prices affecting confident level of our budget and economy will continue. However, as OPEC made statement that crude at USD 60 a barrel is their will. We don’t expect oil crisis will further dampen the market. In fact is a known issue where Malaysia is still biting the bullet during the change process of over dependant to oil prices.
However, we believe RM will continue to stay weak due to the room to raise rate may minimized by GST application starting in April. Slow retail confidence will cause BNM to reluctant adjusting its OPR. We may still see an interest rate increase to calm inflation and stabilizing RM. But we only expect 25 basis points in 2015 with a max of 50 basis points.
The sudden drop of KLCI due to oil prices tumbled is not within our expectation. Indeed, we still cautiously positive about the market especially our top picks. We will continue nibbling if market correct further. But due to RM exchange disadvantages, we will temp reduce investment in overseas especially HKD, SGD and USD related.
We will still buy AUD due to its weakness in parallel to RM but with slower momentum. We will buy more Gold at this level. Nothing to be too worry as our cycle investment again creating a rotating opportunity for our own self to continue buy cheap and potentially profit from it.