Malaysian investors looking towards US$ and foreign markets for better returns
KUALA LUMPUR – The falling ringgit and growing pessimism towards the local stock market are driving Malaysian investors to look at foreign currencies, especially the US dollar and overseas markets for better returns.
A recent survey by Franklin Templeton Investments found that 53 per cent of Malaysian investors would invest in foreign currency-based funds within the next three years, up from 45 per cent last year.
According to the international fund manager, Malaysian investors are also cautious about the prospects of the local equity market this year, with 39 per cent expecting the benchmark index to decline and 30 per cent expecting it to be flat.
“The decision to invest in foreign currencies is mainly driven by how the local currency has performed against other currencies over the last one year,” Franklin Templeton Asset Management (M) Sdn Bhd country head-Malaysia Sandeep Singh said.
“Certainly, what’s happening in the currency market will have an impact on investor sentiment,” he told reporters after unveiling the 2015 findings of the Franklin Templeton Global Investor Sentiment Survey (GISS) Malaysia.
According to the survey, which was conducted between February and March this year, the US dollar and Singapore dollar were the top two currencies of choice among Malaysian investors.
Of the 500 Malaysian investors polled in 2015, 72 per cent said they would put their money in the greenback this year, while 46 per cent would buy the Singapore dollar. This compared with last year’s survey that showed 52 per cent of respondents planning to invest in the US dollar and 48 per cent in the Singapore dollar.
Over the last 12 months, the ringgit has depreciated 13.9 per cent against the US dollar and 7.4 per cent against the Singapore dollar, making it the worst-performing currency in Asia ex-Japan.
The same period also saw the benchmark FTSE Bursa Malaysia KLCI falling about 8 per cent to close at 1722.24 points yesterday.
“Malaysian investors’ sentiment towards the local stock market has turned more cautious and this could be one of the reasons more are looking outside the home country,” Sandeep said.
He noted that increasingly more Malaysians had recognised the need to diversify away from their home-country market as part of risk management and to achieve better returns.
According to the GISS, while Asia remains the top favourite investment destination among Malaysian investors, their interest in the North American market has gained significant ground this year.
When asked which market they expected to get the best equity returns this year, 31 per cent chose Asia (including India), and 22 per cent selected the United States and Canada while only 19 per cent chose Malaysia.
On where the best equity investment opportunities were expected to be over the next 10 years, 41 per cent of Malaysian investors still chose Asia, while 15 per cent saw prospects in the United States and Canada, and 16 per cent saw that in Malaysia.
The GISS indicated there was a growing sense of conservatism among Malaysian investors this year, with 71 per cent of the respondents saying they would adopt a more conservative investment strategy in 2015, compared with the global average of 55 per cent.
Local issues top the concerns of Malaysian investors this year, according to the poll, with 53 per cent citing inflation; 42 per cent falling oil prices; 40 per cent the state of the local economy; 38 per cent rising interest rates and government fiscal policy. This was followed by global issues such as the state of the global economy (37 per cent); general market volatility (32 per cent); the eurozone debt crisis (26 per cent); and slowing China growth (17 per cent).
On a positive note, a strong majority of Malaysians seemed optimistic in reaching their investment goals, with 81 per cent of respondents confident of achieving their financial goals.
Retirement, purchasing a new home and investing in or starting a business were their top investment goals.
By Cecilia Kok - business.asiaone.com
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