Brexit uncertainties may lead to OPR cut

KUALA LUMPUR: Maybank Investment Bank Research (Maybank Research) sees a strong likelihood of a cut in the domestic overnight policy rate (OPR) or statutory reserve requirement (SRR) by Bank Negara as early as July.

In a note on Monday, Maybank Research said this comes amid the new uncertainties brought on by Brexit and headwinds from its knock-on effect, with global financial markets’ volatility expected to heighten. 

“Positively, Malaysian private limited companies’ (PLCs) exposure to the United Kingdom is limited to just a few.

“We continue to take a defensive stance on equity positioning,” it said. 

It added that for Malaysian equities, its preference remains for real estate investment trusts (REITs) and construction.
 
Meanwhile, Kenanga Investment Bank Bhd said Malaysia has the policy flexibility to deal with market volatility and weak global demand.

“BNM still has room to cut the OPR to boost the economy or curtail  short-term capital inflows seeking higher yields.

“We also believe that the government would be able to raise public spending in order to support the economy without the risk of further widening its fiscal deficit given that oil prices have stabilised above US$40-45 per barrel,” it said in a note - Bernama