INVESTORS still holding heavily weighted European currency portfolios ''need to have their heads read''.
That is how one analyst put it yesterday as investors weighed up their options in the light of the collapse of the French franc and the possible demise of the European Monetary System (EMS).
Most analysts agreed that investors would be best advised to avoid heavy weighting of European currencies and seek a safe shelter in US dollars or yen-denominated currencies . . . at least for the time being.
Pauline Gately, head of research at Banque Nationale de Paris International Financial Services, said: ''A lot of investors holding European currencies have been hedging their positions over the last few weeks by buying forward forex contracts on the futures market.'' In fact, most fund managers and analysts, remembering the bitter experiences from last year's European currency crisis, had been well prepared this year, one analyst said.
''Although Hong Kong investors are heavily involved in foreign exchange speculation, they have preferred dollar-based currencies,'' the analyst said.
According to Benjamin Chan, chief economist with the Bank of East Asia, customer deposit distribution in Hong Kong at the end of May stood at $747 billion in Hong Kong dollars, $415 billion in US dollars and $452 billion in other currencies.