A recent survey by Franklin Templeton Investments found that 53% of Malaysian investors would invest in foreign currency-based funds within the next three years, up from 45% last year
“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% said they would put their money in the greenback this year, while 46% would buy the Singapore dollar. This compared with last year’s survey that showed 52% of respondents planning to invest in the US dollar and 48% in the Singapore dollar.
Over the last 12 months, the ringgit has depreciated 13.9% against the US dollar and 7.4% 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% 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% chose Asia (including India), and 22% selected the United States and Canada while only 19% chose Malaysia.
On where the best equity investment opportunities were expected to be over the next 10 years, 41% of Malaysian investors still chose Asia, while 15% saw prospects in the United States and Canada, and 16% saw that in Malaysia.
The GISS indicated there was a growing sense of conservatism among Malaysian investors this year, with 71% of the respondents saying they would adopt a more conservative investment strategy in 2015, compared with the global average of 55%.
Local issues top the concerns of Malaysian investors this year, according to the poll, with 53% citing inflation; 42% falling oil prices; 40% the state of the local economy; 38% rising interest rates and government fiscal policy. This was followed by global issues such as the state of the global economy (37%); general market volatility (32%); the eurozone debt crisis (26%); and slowing China growth (17%).
On a positive note, a strong majority of Malaysians seemed optimistic in reaching their investment goals, with 81% 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.