Ringgit down, Buying up?

There has been many reports which said that with the Ringgit down to new lows, foreign interest in Malaysian properties may be increasing. I do not really agree unless of course these buyers are able to see through that the current so called ‘depreciation’ is actually caused more of the uncertainty and the US$ appreciation instead of the weakening fundamental in 2014. US$ is up against every major currency in the world today. Euro is faring worst than Ringgit. Yes, Ringgit is down a lot. Would foreigners be coming in strongly? Highly unlikely. They are just like the majority, adopting a wait-and-see attitude for now. The reason is not because of the attractiveness of the property due to Ringgit’s drop. The reason is because they are not certain if the Ringgit may drop further. If it does, their investment would be even worst in the long run.
Secondly, do not forget that even the Singaporean market which is considered more international is also down. If I am an international investor from China, my first choice is still Singapore like for the past many years. If I intend to skip ASIA, then I would head to London where the property prices are also weakening. Thus, in terms of actual attractiveness even with the fall of Ringgit, there are still a few other choices. These other choices are also cheaper because their currency has also dropped when compared to US$ as well as the many currencies which uses it as a benchmark. Think objectively, I own a London property versus I own a Malaysian property, which do you think brings more ‘wow’ from the rest of your friends?
Nevertheless, I personally think that Malaysian property continue to be attractive for just one main reason. Long term. We are still a young country. Demand can only increase and not reduce. Growth is still continuing and in terms of the world competitiveness index, despite being a small nation, we are right up there with the rest. This gives us a lot of attention. I also believe the current situation cannot persist forever. Seriously, US economy is still doing fine but the US$ cannot climb like there’s no tomorrow. At some point, some one just have to say, ‘high enough’, then the adjustment would restart. Do not forget, when Ringgit was very strong previously, majority of all analysts were also singing praises of the Ringgit. Suddenly today, everyone is saying otherwise. Please do ask any economist and they will tell you that fundamentals cannot suddenly change within few months unless it’s due to some special circumstances. For now, I think it is. Malaysian companies are tough and I have confidence that it will somehow go through this current stormy night. Happy believing or happy divesting what you are still holding today. It’s just a choice anyway.
written on 10 Jan 2015
Next suggested article: 40 years later – Malaysia property market in my personal view


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