The liberalisation of foreign exchange and de-pegging of the ringgit for offshore investments has widened investment options for local investors with an appetite for overseas investments, said Alan Inn, head of investment and product development of CIMB Private Banking.
“Having offshore investment is an effective way to diversify and enhance your portfolio’s return because investors no longer have to suffer from the lack of investment opportunities.
“Investors are now able to choose from the wide range of investment products. By internationalising the portfolio, investors can benefit from lower risk, result of diversification and thus, returns should grow,” he said.
Inn was speaking in Penang recently at a seminar entitled “Exploring Investment Opportunities Offshore”.
He, however, cautioned that the decision-making process could become complex since different countries and markets had different regulations and their own unique characteristics.
“Not having the necessary knowledge, information and experience on offshore markets can be a major handicap when investing abroad.
“Investors may run the risk of losing money especially if they do the investing themselves without the consult of an experienced and reputable financial adviser,” he said.
Inn said investors should also be prepared to monitor their investments and be aware of currency risks, political risks, applicable transaction costs and taxation laws.
He said CIMB Private Banking, the country’s first full service private bank, could assist and was advising local investors to venture into offshore investments to attain higher risk- adjusted returns.
Inn said CIMB Private Banking had started investing in foreign assets for its private clients in most major markets worldwide, including Singapore, Indonesia, the United States and Britain.
He said CIMB Private Banking was currently in partnership with CIMB-GK of Singapore and other well-established financial service providers.
He added that CIMB would also continue to build its forte in ringgit-based assets.
“We believe CIMB Private Banking has an edge over other local wealth management players in the form of greater economies of scale and better understanding of the investment opportunities available both in the local and international markets.”
“If going offshore is appropriate for the client, we will then recommend suitable offshore products depending on the clients’ risk-return profile, liquidity needs and market or product knowledge.”
Inn said according to Bank Negara’s regulations, an investor who has domestic borrowings is allowed to conduct offshore investment of up to RM100,000 per annum while someone without borrowing could invest an unlimited amount.
Borrowings are defined by Bank Negara as having more than or any other loans other than one housing loan and one vehicle loan. Credit cards are not counted as borrowings.
Investors who are interested to conduct offshore investment must also register with Bank Negara ahead of time, if investing more than RM50,000.
An investor who goes through local unit trusts would not need to go through these regulatory considerations
“Having domestic investment provides a natural hedge to the investor’s future local commitment and furthermore, Malaysia as a country and market still holds tremendous prospects to an investor’s portfolio.”
Edge Daily
Photo credit: aotaro via Visual Hunt / CC BY
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