The Asia region offers attractive dividend yields in addition to potential capital appreciation, although for UK-based investors, currency movements can have a meaningful effect on short-term returns.
Over the 12 months to the end of May, the FTSE World Asia Pacific (ex Japan) Index rose by 14% in local terms. However, returns for the sterling-based investor were boosted to 30% by sterling weakness against Asian currencies. In an attempt to reduce foreign exchange volatility and support export-driven growth, many emerging market countries have operated managed exchange rate policies which limited currency appreciation. With developed countries continuing to deliver sluggish economic growth, there is increasing pressure for further appreciation of these currencies. The People’s Bank...
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