KUALA LUMPUR (July 1): Malaysian shares may today track global markets' cautious sentiment after Greece defaulted on its debt.
In Malaysia, investors will closely watch if the FBM KLCI is able to sustain its gains a day earlier. Yesterday, the KLCI rose 14.72 points or 0.9% to finish at 1,706.64 on bargain hunting and as fund managers' quarter-end window dressing supported equity gains.
Today, the ringgit will also be in the spotlight in anticipation that Greece's debt sentiment may result in higher demand for US dollars. This is because the US dollar is deemed a haven in times of market volatility.
Reuters reported that Greece made last-minute overtures to its international creditors for financial aid on Tuesday, but it was not enough to save the country from becoming the first developed economy to default on a loan with the International Monetary Fund (IMF).
Greece, as expected, was not able to repay 1.6 billion euros it owed to the IMF, in what was the largest missed payment in the fund's history.
As Malaysian markets contend with Greece's financials, Malaysia's debt outlook upgrade by Fitch Ratings may offer a positive note to investors.
In a statement, Fitch said it had maintained its 'A' and 'A-' ratings for Malaysian government debt and upgraded its outlook for the country's long-term issuer default ratings to stable from negative.
Fitch said it had taken into account the nation's improving financials and economic growth. "Malaysia's rating remains supported by reasonably strong real GDP growth rates and low inflation volatility," Fitch said.