With growing confidence in Malaysia's economy and political environment, there is a forecast that Malaysia Ringgit (MYR) will fall below 4 to 1 USD and 3 to 1 SGD rate.
How True It is?
Economics Fundamental- Malaysia has been economically strong under the current government. With the trade war between USA and China, there has been an increase in foreign direct investments in Malaysia; in fact Malaysia has seen a growth in FDI. This has helped by the confidence in global investors have for Anwar economic and political reforms
Lower Interest Rates for Sovereign Debts- Malaysia's sovereign debt are mainly borrowed in USD, with declining rates in US interest rates, the interest serviced by Malaysia will reduce in time to come; coupled with PM Anwar's good economic reform, targeted subsidy reform which has reduced government spending, Malaysia's fiscal position has improved positively.
If PM Anwar continues to remain in power for 1 more term, it is definite Malaysia will progress economically and if this trajectory continues; 7 years from now, MYR will be at a level of 2.0 Ringgit to 1 Sing Dollar level; however if PM Anwar's coalition does not win the GE, it is likely MYR will just worsen to 3.5 or even 4 to 1 Sing dollar.
How Would it Benefit Stocks?
With the good political governance and strong economy of Malaysia; coupled with appreciating Ringgit, I am now setting sights on buying Malaysia stocks.
For starters, Riverstone with industry moat + exposure to Malaysia is a stock to look at. Another is Starhill Global REIT, which has a few upscale malls in KL, the strengthening Ringgit will improve the middle-income wealth and Starhill REIT will benefit. In fact, I am hoping Starhill will sell off its entire Singapore mall asset, deleverage by paying off debts and be a Malaysia focused retail REIT; it is likely to experience a 25% upside in share prices.
