KUALA LUMPUR, Feb 12 — Malaysia’s equity market saw a foreign net inflow of RM1 billion in January 2019 following three straight months of outflows while foreign holdings of equities edged up to 23.5 per cent from 23.4 per cent in December 2018.

United Overseas Bank Malaysia (UOB Malaysia) senior economist Julia Goh said January’s renewed foreign inflow into equities came alongside a firmer ringgit and reversal in non-resident portfolio flows into emerging markets.

"We think the US Federal Reserve’s (Fed) more dovish stance signalled patience for further rate hikes, suggesting that the Fed may keep rates on pause until June 2019. This provides some respite for markets and initiates the hunt for yield.

"However, volatility is likely to persist driven by headlines and events against a backdrop of slower global growth and demand,” she said.

On the ringgit’s outlook, Goh said it would likely range between 4.05 and 4.10 against the US dollar in the near-term before a subsequent move towards 4.15 and 4.18 by mid- and end-2019, respectively, underpinned by the Fed resuming its rate hikes in June and December.

She said in the near-term, the ringgit would likely be supported by stable domestic growth drivers, gradual policy reforms and sustained current account surplus.

"The ringgit remains undervalued compared to its peers and ringgit-denominated assets may offer safe haven defence amid regional election events in the first half of 2019,” she said.

Commenting on US-China trade talks, Goh said the bank’s base case was for an extended period of negotiations between the world’s two giant economies with tariffs kept status quo. — Bernama