Will you invest in stocks listed in a weak currency such as Rupiah? - Seedly
 

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Asked by Gabriel Tham

Asked on 03 Dec 2019

Will you invest in stocks listed in a weak currency such as Rupiah?

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

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Hi Gabriel,

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.

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Kelvin Seetoh
Kelvin Seetoh, Founder at Kelvestor.com
Level 6. Master
Answered on 03 Dec 2019

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.

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Lim Chun Long Jimmy
Lim Chun Long Jimmy, Co-founder at PolicyWoke Pte Ltd
Level 6. Master
Answered on 19 Jan 2020

I personally am not and will not be investing in such stocks due to the high currency risks.

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Billy Ko
Billy Ko
Top Contributor

Top Contributor (Jan)

Level 7. Grand Master
Answered on 19 Jan 2020

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

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pat
pat
Level 7. Grand Master
Answered on 19 Jan 2020

If only you are sure that your return can outweight the FX risk.

Else, just avoid...

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Wilson Nid A Break
Wilson Nid A Break
Level 8. Wizard
Answered on 11 Dec 2019

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

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Wallace Chai
Wallace Chai
Level 9. God of Wisdom
Answered on 11 Dec 2019

I simply will not due to currency risk. There are so many more business to invest out there. Go for the better ones!

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I
Irwin
Level 3. Wonderkid
Answered on 10 Dec 2019

No, I would not. Because it would affect my returns and besides, when the currency is weak, my guess is the stocks would be affected as well. Double trouble.

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Choon Yuan Chan
Choon Yuan Chan
Top Contributor

Top Contributor (Jan)

Level 9. God of Wisdom
Answered on 03 Dec 2019

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.

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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 8. Wizard
Answered on 03 Dec 2019

No. The fx risk is a big concern. Rather have my holdings in USD or SGD.

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Bjorn Ng
Bjorn Ng
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Top Contributor (Jan)

Level 9. God of Wisdom
Answered on 03 Dec 2019

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. ​​​

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Alex Yeo
Alex Yeo
Level 4. Prodigy
Answered on 03 Dec 2019

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. ​​​

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Junus Eu
Junus Eu
Top Contributor

Top Contributor (Jan)

Level 9. God of Wisdom
Answered on 03 Dec 2019

Personally I would not.

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Junus Eu
Junus Eu

03 Dec 2019

Simply because the FX loss would wipe out any gains. And also consistently monitoring FX against capital gains is additonal work.
Brandon Ho
Brandon Ho

03 Dec 2019

Ahh I see, thank you for your input! :)

Nope. Instead, I will prefer to invest in SGD given MAS's monetary policy.

Here is everything about me and what I do best.

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