As a Malaysian investor, I can choose stocks with the best fundamental qualities in Malaysia and invest in them when they are undervalued. I could earn a stable 5% in dividend yields per year from these stocks as I wait for them to appreciate in value. But with MYR weakening by 3%-4% per year against USD and SGD, this seems like “swimming against the current”. So, the questions are: “Is it still okay and worth it to invest in Malaysian stocks?”.
Here is my take on this:
Some limitations. I’m a dividend-growth investor, who earns dividend income regularly from my stock portfolio. I accumulate fundamentally sound stocks and hold them for “life”. So below is written in the context of investing. It is not very suitable for stock traders or speculators, who trade for the short-term or simply have no clue as to what they are doing in the stock market.
Malaysian Stocks:
Years ago, I started investing in Malaysian stocks. It was suitable as I was new, had lower capital and felt that I have “homeground advantage”. The portfolio in Malaysia was small in size but I gained a lot in terms of education, experience & emotional training. The Malaysian stock market is my “investment school” and I find that my past experiences with Malaysian stocks have contributed greatly to my current successes in building an overseas portfolio.
Today, I continue to hold some Malaysian stocks in my portfolio. They make a small portion in my portfolio and I treat it as a slightly better alternative to local FDs. It’s rolling money meant to be a fund for emergencies. So if there is no real need, I would continue to receive my 4%-6% in dividends per year. But if there’s a need, they will be the first to be “disposed off” in my portfolio as a whole.
In brief, investing abroad is a viable way to hedge against weakening MYR in the long-term. Personally, I don’t think the question is: “Could MYR be weakened in the future?”. As a Malaysian, I think a weaker MYR may be helpful in improving, enhancing and boosting our competitiveness in trades and commerce. So it can be good for our economy. But, if we expect our MYR to “hold onto its value” for the long-term, that may not be wise.
By Ian Tai Financial Content Machine. Dividend Investor. Produced 500+ Financial Articles featured in KCLau.com in Malaysia
