INQ7MONEY TOPSTORIES
June 23, 2006
Updated 03:13am (Mla time)
Doris Dumlao
Inquirer
INVESTORS in emerging markets like the Philippines will be better off riding out the volatile financial markets than losing sleep over recent sell-offs caused by US interest rate hikes, a Citibank regional official said Thursday.
Citibank Asia-Pacific head of research communications for investments, Lim Ai Meun, who flew in from Singapore for a media briefing, said the apparent shift in risk appetite away from emerging markets was just temporary as US interest rates were not likely to go up significantly.
Lim said the US Federal Reserve’s key interest rates would likely peak at 5.25 percent this year although a further hike to 5.50 percent was possible.
She said Citibank believed that the Fed was unlikely to overdo concerns about inflation, given that interest rates take time to work into the markets.
Given this outlook, she said, global markets will still seek investment opportunities in emerging market assets.
“Despite the broad sell-off in recent weeks, investors should not be tempted to trade in and out of mutual funds as this move can significantly erode their returns,” Lim said.
She said an investor who keeps investments for three years was likely to earn more than one who seeks short-term profits.
“If you believe that the fund will perform over the long term, holding on to your investment will ensure you don’t miss out on the recovery,” Lim said.
She said regional markets in recent weeks were just going back to the historical average levels, in a correction that would continue in the short-to-medium term.
In the meantime, investors can review their portfolios and to limit their volatility, Lim said. She suggested diversifying to other assets, including bonds and equities in developed and emerging markets. With INQ7.net
http://beta-services.inq7.net/express/06/06/23/html_output/20060623-6136.xml.html
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