KUALA LUMPUR (June 13): U.S. real-money funds are generally constructive on the ringgit although there are concerns about Malaysia’s fiscal outlook following last month’s unexpected election result, according to Goldman Sachs.

* Key issues include how the govt will fund its election pledges and whether lower infrastructure spending will be enough to reduce imports and improve the current account, analysts Danny Suwanapruti and Andrew Tilton wrote in a note Wednesday after meeting institutional investors in the U.S.

* “Despite the risk of a slowdown in economic growth, investors said this could be positive for the MYR if the current-account position improved”

* Real money and hedge funds remain bullish on Thailand’s baht due to the current-account surplus, low inflation and high level of FX reserves

** But some are concerned that Thailand’s political situation may lead to instability in coming months

* Investors remain bearish on the Philippine peso due mainly to the deterioration of the current-account balance

** Positioning in long USD/PHP is stretched and implied yields are quite high so leverage funds are not keen to add short PHP positions

** Still, investors are not keen to build structurally long PHP positions either as the external position is weak, inflation has been rising and fiscal expansion is likely to persist