Hong Kong investors have been advised not to rush into investments away from a US dollar base but to take a measured approach.
Currency and investment experts say the level of impact a declining US dollar could have on Hong Kong investors depends on how individuals diversify their investment portfolios, appetite for risk, and retirement and domicile intentions.
Cecilia Chan, HSBC Halbis Partners, director, head of fixed Income, said that before making any rush decisions on how to mitigate against the weakening greenback, investors should consider their needs in terms of where they live and work, the currency they commonly use for spending, long-term investment goals and where they plan to retire.
Ms Chan said the rule of thumb for currency risk management is to structure a diversified portfolio, but one that is weighted towards an investor's home currency. 'A balanced portfolio that includes a local-currency bias supported by diversification usually satisfies most needs,' she said. This could include investing Hong Kong or US dollars in funds that ultimately invest in a basket of other currencies.
It is important to look closely at the underlying currency exposure of investments. For example, a balanced fund consisting of cash, bonds and equities could have an underlying currency of US or Hong Kong dollars but diversified into other currencies. This could be preferable to investments made entirely in US or Hong Kong dollars.
Those with a risk appetite looking to take advantage of a possible further weakening of the greenback could consider investing in euros or sterling.
