Asked on 03 Dec 2019
Will you invest in stocks listed in a weak currency such as Rupiah? The capital gains might be wiped out with a continual decline in currency vs SGD
Top Contributor (Jan)
I personally would not. A strong currency is a sign of stability to a certain extent. Last thing I need is political instability destablizing markets and leading to a massive sell down in the markets, followed by currency depreciation. That would be the worst kind of disaster for me.
I tend to stick with more stable currencies. US and SGD to name a couple. No investments in any of the BRICs directly.
Apart from currency risk, I also fear for corporate governance.
There is a lot of corruption that exists in Indonesia, unfortunately. Some listed companies are able to get certain projects because of special links to the government or certain sectors. Should any political climate change, it may affect certain industries.
Not worth. It's like swimming against the tide and sometimes swimming blind too.
Come to think of it, many analysts keep citing emerging markets i.e. Myanmar, Vietnam etc. as good investment opportunities. I probably would dabble into it if I were to find something thats worth investing in
Only made sense to invest in Indonesian stocks if you had some income and expenses that are denominated in rupiah in the first place, owise no point taking on forex risk on a currency that had a historical bad reputation of defending its exchange rate
Depends. If the stock can grow at 12% per clip while the currency depreciates it can be a good options.
In Malaysia, there are companys such as Yinsor and Public Bank Berhad which have yielded postiive returns for Singaporean investors despite the currency depreciating by 20% as the share price grew by at least 200% in the same period. Mr Market will always reward companies with good managemnt track record regardless of the country of origin.
I personally would not. Speaking from experience, I used to invest in this REITs called First REITs - they own hospitals in Indonesia, but they are paying rental in SGD. The system is a little complicated, but basically, the weakening of Rupiah causes the rental to drop.
Similarly, Fraser Logistics has properties in Australia, where they collect rental in AUD. If you see the recent results, they are earning more AUD income, but SGD income drop simply because of this currency risks.
At the end of the day, forex is not something I would personally invest in as it seems more dependant on "general economy" rather than a particular set of results, such as a solid business.
Generally I prefer more stable currencies like SGD, USD, HKD, THB.
Unless I'm living in Indonesia, and using Rupiah for my daily life, then yes.
Personally I would not.
Top Contributor (Jan)
Nope. Instead, I will prefer to invest in SGD given MAS's monetary policy.
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