Western AM to increase EM currency exposure
Legg Mason subsidiary Western Asset Management expects emerging market currencies to outperform over the next 18 months and plans to increase its allocation to the asset class.
Michael Zelouf (pictured), director of international business, said the firm is likely to increase exposure to some of the emerging market currencies for its fixed income portfolios and forecasts the Chinese yuan, Indonesian rupiah, Korean won and Malaysian ringgit to outperform.
He explained Asian central banks have used exchange rates as a tool to curb inflationary pressure in the past 12 months which has led their currencies to greatly appreciate. Zelouf predicts the above four currencies are likely to appreciate for another 5%-8% against the US dollar over the next 18 months on the back of strong GDP growth in those countries.
Western Asset Management, a wholly owned subsidiary of Legg Mason Inc., has total AUM of $447.1bn as of 30 June 2011. The director of international business also said the firm’s overall investment for fixed income tends to favour selective banks, emerging market and quality high yield sectors for this year and the next.
This article first appeared on Professional Adviser Hong Kong.