Forget Password?
  1. Indices
  2. Commodities
  3. Currencies
Straits Times 3,159.68 +0.88 +0.03%
Hang Seng 26,435.67 -33.28 -0.13%
Dow Jones 26,935.07 -159.72 -0.59%
Shanghai Composite 3,006.45 +7.17 +0.24%
FOREX: 2 Reasons To Stay Away From CNY & MYR; Buy USD
Aspire, Investments | 29 September 2015
By: Vance Wong
Articles (74) Profile

Maybank’s analysts reported last week that their projection for Southeast Asia’s growth had been lowered to 4.4 percent from 4.9 percent, largely due to China’s recent economic weakening.

The Yuan is of course not spared, but another currency that we should take note of is the Malaysian Ringgit (MYR). Here are two reasons why you should stay away from Yuan and MYR as much as possible for now.

1. Lowest China’s Caixin Manufacturing PMI Since 2009

On the 22 September, Managing Director of the International Monetary Fund, Christine Lagarde said that she sees increased downside risks to global growth, underperforming commodity prices and a decelerating economic growth in China.

Furthermore, the most recent report of China’s Caixin manufacturing PMI indicated that it has dropped to the lowest level (47.0 versus 47.3 in Aug 2015) since March 2009. This suggests that the overall Chinese manufacturing sector stays under pressure. A recovery will be dependent on the government’s fiscal stimulus in the near-term.

The Chinese economy slowing down is not news anymore but the recent softening of the Yuan has been weighing on investors and economists’ sentiments. In a recent article by Dr Chan, he expects at least another devaluation of the Yuan by ten more percent.

2. MYR Remains Weak Due To Weak Oil Prices & Domestic Issues

Not only has the Chinese currency been weakening, Singapore’s neighbour, Malaysia, is going through currency devaluation for some time now. Additionally, weak oil prices have been a bane to the MYR, not to mention the recent tension within the local political space as well.

However, Maybank’s analysts think that the MYR weakness is just a temporary issue and it will rebound once oil prices and political tension are resolved. The fundamentals of MYR remains intact but investors should not expect recovery in the near-term.

Investors’ Takeaway

According to Maybank’s analysts, we can expect weakening of these two currencies to persist at least in the near-term. In the current climate, investors can look at the strengthening US Dollar, especially when Fed rate hike has been postponed.

Nevertheless, amidst all the pressure and uncertainty in Asian markets, there are still opportunities for investors if they are looking in the right places. To Kevin Gin, it is quite straightforward when it comes to China: look in the same direction as the government.

Still worried about when and how much would the US Federal Reserve hike interest rates? Do you have burning questions that you want to ask regarding the China economic slowdown and SHCOMP nosedive in June? Are you confused if any of the external factors from other countries in Asia will affect your Singapore stocks portfolio?

Catch renowned investors and speakers with rich experience in the stock markets, who have had witnessed multiple stock market crashes and global recessions over the years at Shares Investment Conference 2015!

Speaker profiles

1. Dr Chan Yan Chong, a renowned investor with more than 25 years of experience and the MBA programme director & associate professor of business school at the City University of Hong Kong.

2. Kevin Gin (CFA), the Founder and Principal of Alpha Capital. He was the former COO for CITIC Securities, Head of Singapore and Regional Real Estate Research for Kleinwort Benson Securities Asia (now part of Credit Suisse) and Head of Greater China Property Research with Yuanta Securities (Hong Kong)

3. Louis Wong, one of the most experienced fund managers in Hong Kong. He has over 25-years of solid experience and track record in the financial market. He was awarded Best Financial Analyst for 3 years by the Putonghua Channel of Radio Television Hong Kong and is also a part-time instructor of several investment courses in various Hong Kong universities.

4. Daniel Loh, an investment coach that specialises in equities and derivatives trading, he appears regularly on local TV financial programmes like “Good morning Singapore” and “Hello Singapore”.

With a Communications background, Vance has the passion to write with a purpose - to provide content supported with substantial evidence to vested readers.

Please click here for more information about this author.

Join The Conversation
The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

All Rights Reserved. Pioneers & Leaders (Publishers) Pte Ltd. Best viewed with Mozilla Firefox 3.5 and above.