Franklin Templeton's Mark Mobius said on Tuesday that Malaysia's currency is undervalued by 28 percent, which makes the country an attractive prospect for investors looking at Southeast Asian economies. The ringgit was Asia's worst performing currency last year when it lost 18.5 percent to the dollar. It has since strengthened 4.0 percent this year with the return of foreign capital to ringgit bonds.
"It is a 28 percent undervaluation, which is why we have been buying local stocks," Mobius, who is executive chairman of Templeton Emerging Markets Group, said in his speech at a conference in Kuala Lumpur. "The currency is undervalued, so I advise you all after this conference to head to the nearest mall and start shopping, because things are very, very cheap here. And this is why we are very positive on Malaysia at this stage," he added.
Mobius said emerging markets are at a "turning point", and listed Brazil, Vietnam and Malaysia among his favourite emerging market investment destinations. Currencies in Southeast Asian economies came under increased pressure last year amid a global slump in prices and a slowdown in China. The MSCI index of Southeast Asia, a benchmark of the region's biggest stocks, plunged about 20 percent last year, driven in part by these factors which brought down valuations down to 2009 lows.
Malaysia's economy grew 5 percent in 2015, slowing from 6 percent in 2014 but within the government's 4.5-5.5 percent estimate. The ringgit took a hit from sustained weakness in global oil and commodity prices last year, and continues to face risks from Malaysia's diminishing surplus, which narrowed to 5.39 billion ringgit ($1.31 billion) in January trade.
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