PETALING JAYA: The Ringgit has bottomed out and the time is ripe for investments to flow back into Malaysia, said a leading fund manager in Asia.
Hong Kong-based Value Partners Group chairman and co-chief investment officer Datuk Seri Cheah Cheng Hye said after three years of underperformance by the Ringgit which saw it depreciate by some 25%, the Malaysian currency has now stabilised and should slowly inch back to its fundamental level of between RM3.80 to RM4.10.
With this, Cheah is also looking to invest back into Malaysia.
“It is quite obvious that the Ringgit has bottomed out, along with crude oil prices. For 2017, we are also starting to see another trend – the weakening of the US Dollar, which is very good news for us. We are seeing emerging markets like Malaysia starting to outperform this year. And outperformance attracts outperformance,” Cheah told a crowd of over 500 people at the Star Media Group’s PowerTalks: Business Series in Eastin Hotel yesterday.
Cheah, also known as the Warren Buffett of Asia, is a former The Star journalist who later became one of the most influential hedge fund managers in Asia. Today, Value Partners, which he co-founded, has around US$14bil (RM62bil) worth of assets under management.
The political situation in Malaysia, he added, is stable.
“While we previously only invested in the Malaysian palm oil sector, we don’t see Malaysia just as a commodity player anymore. Government reforms are improving. We are now looking at some of the Government-linked companies and commercial businesses,” said Cheah.
He added that as it was very likely that the general election would be held this year, the market would also typically perform better.
Cheah said another golden opportunity that had arrived was Chinese nationals, who were the biggest savers in the world. To be precise, they have a savings rate of 46%, all of which is looking for a home to invest in.
“The Chinese have the money and they want to diversify. That is why you see housing bubbles happening in China. They need to put their money somewhere. This gradual liberalisation of the Chinese economy is now happening and all that savings will have to go somewhere. There is a chance that some of that money is going to come over and they will need someone to manage it,” he said.
On the fear that the Chinese government is tightening money flows out of the country, Cheah is not concerned.
“It is true that China’s outflows have been increasing and this is mainly because of the decline in the Renminbi. I don’t think there is anything to worry. The Chinese economy is a controlled economy and they know what they are doing. I don’t feel China is seeking trouble with anyone, especially not with the US. China just wants to fulfil its dream of doubling its per capital income by 2020 or 2021,” said Cheah.
On Alibaba Group founder Jack Ma being an adviser to the newly launched Digital Free Trade Zone (DTFZ) in Malaysia, Cheah is extremely bullish.
“I do know Jack Ma although we are not very close. I would say that he has completely transformed mainland China and changed the way people think of buying and selling things. If Malaysia really gives him a chance, I feel he can very positively impact the Malaysian economy, for example, in making it more efficient.
Cheah was born in Penang in 1954, and started working in The Star at the age of 17 as a newspaper folder before subsequently becoming a reporter. He left Malaysia for Hong Kong in 1974.
He was a journalist for 17 years, including The Star, Asiaweek, Far Eastern Economic Review and The Wall Street Journal (Asian Edition).
He changed his career in 1989, joining Morgan Grenfell in Hong Kong as Head of Research in Hong Kong and China.
In 1993, he started his own business by founding Value Partners in Hong Kong with his partner V-Nee Yeh, with less than US$5mil (RM22.12mil) under management. Today, Value Partners is one of Hong Kong’s biggest success stories.
Cheah is one of the pioneers in institutional investing in China-related stocks and in mid and small stocks.