The Ringgit will be facing severe volatility in coming weeks. At this juncture, it is best to abstain from buying any shares in the Bursa. Rather than looking at an entry point based on the KLCI, look out for stability in the Ringgit vs other currencies. A period of stability in the Ringgit will indicate that the worst could be over.
Oil could continue to cast a shadow over the Ringgit so keep an eye on oil as well. Oil price could dip below US$40 per barrel as the summer driving season ends and refineries go into maintenance mode in autumn. This could increase the storage at Cushing and further depress the price of oil.
Weakness in China's economy will also increase weakness in emerging markets currencies, including the Ringgit. China's economy could perform below expectations as exports have fallen, and consumption could worsen in Q3 and Q4 brought on by the stock market rout which wiped off US$4 trillion in wealth.
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