KUALA LUMPUR (Jan 13): BIMB Securities Research has advised investors to focus on stocks that are poised to gain from a stronger US dollar, particularly commodity assets like gold, which is expected to see heightened demand as a safe-haven investment and a hedge against inflation.

“We recommend adopting a more defensive portfolio positioning, particularly with President [Donald] Trump’s inauguration next week, the upcoming Chinese New Year, and the Ramadan fasting month shortly thereafter,” the research house said in a note on Monday.

BIMB noted that with the ringgit expected to weaken against the US dollar this year, export-driven sectors, such as semiconductors, gloves, and commodity-linked stocks like gold and plantations, are likely to benefit.

Generally, a weaker ringgit makes local assets more attractive to foreign investors, as it increases the value of their investments when converted back into their home currencies.

HSBC Bank Malaysia Bhd added that Malaysia will benefit from the growth in data centres, driven by increased demand for cloud and artificial intelligence services. Large tech giants are already investing heavily in the market, it noted.

HSBC said the inflow of foreign investment is benefitting sectors such as equipment makers, chip designers, testers, construction companies, and power producers.

The FBM KLCI closed 1.05%, or 16.82 points, lower at 1,585.59 on Monday, its lowest level since August 2024. Most sectors ended the day in the red, with 913 losers against 211 gainers. Meanwhile, the ringgit was down 0.28% against the US dollar at the time of writing.

Market experts see the ringgit trading between 4.25 and 4.60 against the greenback by year-end, anticipating continued pressure on the local note due to a potential US interest rate hike, foreign investors likely reducing their holdings in both equities and bonds, and the looming tariffs by the US administration on China.

“Regionally, the looming trade tariffs by the incoming Trump administration will be the key drag to Asia FX [foreign exchange] this year. Higher-for-longer US rates and overall uncertainty may translate to increased portfolio outflow pressures regionally, thereby weighing further on Asia FX,” said UOB Global Economics and Markets Research senior economist Julia Goh.

“Overall, we maintain our negative outlook on Asia FX, expecting most currencies to fall further against the USD this year,” Goh added.