Retail investors turn to foreign exchange

  • Business
  • Friday, 11 Jul 2008

This follows sophistication, continued liberalisation of financial services

PETALING JAYA: Retail investors are now increasingly investing in foreign exchange (forex) following the continued liberalisation of the local financial services market and greater investor sophistication.

The de-pegging of the ringgit against the greenback, coupled with the opportunity to rake in potentially higher returns, has further fuelled interest in this asset class.

Aisyah Lam

Citibank Bhd head of wealth management products Aisyah Lam said the continued liberalisation of the local financial market had made investors more aware and interested in opportunities outside the traditional assets of equities and bonds.

“The de-pegging of the ringgit has helped pave the way for domestic retail investors to consider forex as an investment opportunity. Retail customers are certainly more aware of trends and implications of currency movements now than before de-pegging,'' she said in an interview.

She added that the bank believed forex was one of many areas that would see further growth as the global forex market was extremely vibrant with liquidity doubling that for equities. Currency, she said was a viable alternative investment in any given market condition.

On the bank's forex business, Lam said Citibank believed it had more than 25% share of the local market.

According to Lam, Citibank is a major forex player with established leadership especially in the institutional business.

With increased contribution from the retail segment, the bank was optimistic its leadership position would further strengthen, she noted.

Gan Kok Kim

OCBC Bank (M) Bhd head of treasury Gan Kok Kim said investors were beginning to view forex as an entirely different asset class with the ability to help spread their risks while potentially garnering greater returns.

He said there had been an upward trend in the bank's forex business.

“The retail sector has been the traditional user of forex for remittance, travel and education purposes. We will continue to innovate and introduce new products, including appropriate forex investment products, he said.

Gan said OCBC's popular forex products included its Foreign Currency Fixed Deposit and Dual Currency (Structured) Investment.

On forex products for its retail investors, Lam said Citibank was already offering products such as foreign currency placements on various tenors for deposit-centric clients as well as dual currency investments for the more savvy investors.

“Our dual currency account investments offer our customers’ the opportunity to explore potentials of returns higher than fixed deposits through currency play.

“Exposure to foreign currency investments is also available through unit trust, either in form of feeder funds or even direct investments,'' she added.

Meanwhile, Standard Chartered Bank Malaysia Bhd country head for consumer banking Ho Toon Bah said forex revenue from its retail segment from investments and deposit products had doubled year-on-year since 2006.

He said customers could place their foreign currencies in its call account or time deposit, which could give better interest rates than their ringgit-denominated deposits, depending on the currency selected.

Ho Toon Bah

“Our dual currency investment, Premium Currency Investment (PCI), is popular with our investors, giving as much as 13% per annum interest rate depending on the currency pair chosen. For this product, customers are guaranteed the returns as long as they don’t mind maintaining their funds in either currency.

“Foreign currency call account and time deposits are available to the general public whereas PCI is a structured investment targeted at the more sophisticated segment of high net worth investors,'' Ho added.

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