The Federal Reserve’s decision to cut interest rates will certainly boost U.S. markets, but mutual fund managers expect the increase to be even bigger in international markets, Dow Jones reports.
Many foreign markets’ currencies move in tandem with the U.S. dollar, explained Hayes Miller, a portfolio manager at
“The big story is that because of the hard peg in the Hong Kong dollar, we should see a nice pop in the Hong Kong stock market as a reaction to Tuesday’s Fed move,” Miller said.
Hong Kong is the only market with a hard peg to the U.S. dollar. Others, such as Thailand and China, have a soft peg, he said, and they, too, “could also get a good boost out of this,” Miller said.
“The rate cut in the U.S. is good new for everyone,” said David Kovacs, lead manager of the Turner Large Value Fund. “But it’s particularly going to benefit U.S. investors putting money into stock abroad.” That’s because the U.S. dollar is declining in value and is now trading at its lowest level against the six largest world currencies since 1995, Kovacs said.
