Weakening of Ringgit: Should we invest locally or abroad ??? (Aug 2015)

In the midst of weakening Ringgit currently, many investors are starting to feel uncertain about their next move. Should we invest locally or abroad going forward? What are the factors that we should consider?

In our opinion, we should go back to the basic of investing by answering these two simple yet mind-challenging questions:

1. What is the type of return are we looking at?
   Yes. All of us knew that we can either go for dividend or capital gain. But, the third type of return comes from foreign exchange gain. Given the same type of investment holdings, the return could be very much different if it was invested in different currency class.
   
   
   
   
2. What's the rule of thumb for placing your money into an investment?
   
   Talking about the rule, it should be very much based on the fundamentals of various asset classes. Profit and loss, P/E ratio, ROI, Equity to Debt ratio and so on... However, sentiment and emotion sometimes clouded our mind, forcing us to forget these fundamentals and succumb to our inner fears. The fear of Ringgit continues to go down and the fears of holding Ringgit still.

After answering these two questions, we hope that investors like you could really have a clearer mind before making your next move. If our investment is based on the fundamentals of a country or region, and we knew that the prospect of it is still bright, should we simply avoid it due to its weakening currency now?

After depreciating so much, do you still think that Ringgit will continue its free fall for a prolonged period? In our opinion, the downside risk for Ringgit is limited going forward, and based on the current valuation of local shares, it becomes attractive once again for bargain hunting. Does investing in local market posing you any currency risk? Definitely NO... (Do you understand?)