UNDERVALUED RINGGIT IN FUND MANAGERS’ SIGHT
Currency remains undervalued, under-owned despite table-topping total returns of more than 13pc
KUALA LUMPUR
THE ringgit and yuan are emerging as Asia’s most-promising currencies for fund managers as they look for the best place to put their money in the new year.
According to Bloomberg, this year had marked a turnaround for the ringgit, which had rebounded from a 19-year low on the back of surging oil prices, and bets the central bank would tighten policy.
With prospects for better exports and economic growth, the currency has delivered a total returns of more than 13 per cent.
Amundi Asset Management liked the ringgit due to the country’s improved fundamentals, Bloomberg quoted senior portfolio manager for emerging markets currencies Hakan Aksoy as saying.
For Investec, the ringgit was attractive as it was undervalued and under-owned, it also quoted fund manager Wilfred Wee as saying.
Union Investment Privatfonds GmbH is more comfortable with the ringgit now than earlier because of higher crude prices, says Frankfurt-based senior portfolio manager Christian Wildmann.
Bloomberg said a rebound in exports, widening current-account surpluses for some nations and an ongoing global chase for yields were fuelling optimism that regional currencies would extend their rally into next year.
A gauge of Asian currencies is up 5.5 per cent this year, set for its best performance since 1998.
South Korea’s won is leading spot gains, while the ringgit tops in terms of total returns.
“We expect the Asian economies to do well as the global recovery broadens out. We can expect Asian currency strength to sustain into next year,” the report quoted Wee as saying.
But it said there were risks, too.
While the United States Federal Reserve this week maintained its projections for three interest rate increases next year, a more hawkish tilt could spoil the party for Asian exchange rates.
A surprise jump in global inflation or a war on the Korean peninsula were other spoilers, said investors, who also favoured the rupiah and the rupee, while being less optimistic about the baht and the won, it said.
The offshore yuan is set to halt three years of losses as exports rise and manufacturing activity firms up.
The People’s Bank of China’s move on Thursday to boost market interest rates showcased the authorities’ determination to continue with a deleveraging campaign that’s propelled bond yields. That bodes well for the yuan next year as higher rates are seen luring investors.
China’s offshore yuan was attractive due to the nation’s prospects of inclusion in global bond indexes and rising yields, according to Investec Amundi.