HSBC Bank yesterday advised currency investors to reduce euro holdings on concerns over the European debt crisis, and to shift their portfolios to currencies with better prospects such as the Australian dollar.
Steve Chuang (莊懷德), senior vice president of wealth management at HSBC Bank (Taiwan) Ltd, said investors would do better to gradually unload their holdings of euros to zero because of limited visibility of the euro movement, which has been weighed down by the European debt crisis.
“Investors should reduce their risk to the minimum. There is risk investing in euros as European countries in deep debt are grappling with the problem, which could take a long time to solve,” Chuang said.
To ensure a better return, investors should increase their holdings of strong currencies such as Asian currencies, which are expected to rise along with appreciation of the Chinese yuan against the greenback in the second half of this year.
The Australian dollar would also be a good investment target as the movement of the currency has closely tracked the trend of most Asian currencies, Chuang said.
The central bank of Australia has led its global peers in tightening monetary policies, which also boosted the Australian dollar, he said.
Investors may increase their holdings of Australian dollars to 30 percent of their currency portfolio, Chuang said, up from the less than 20 percent he advised previously.
The US dollar and the New Taiwan dollar may account for the rest of the portfolio, he said.
Chuang also said investors who are interested in investing in stock markets should start buying stocks listed on fast-growing emerging markets, Asian stock markets, in particular, because a sharp correction in the first half would bring higher returns.
Taiwan’s stock market is one of the emerging stock markets in Asia, he said, adding that the growth momentum in emerging stock markets would be much stronger on the back of strong corporate earnings and robust economic growth.
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