Foreign investors back as net buyers of Malaysian bonds

PETALING JAYA: Foreign investors returned as net buyers of Malaysian debt securities after selling a cumulative RM9.8 billion between November 2018 and 2019, according to UOB Bank.

The net buying in February stood at RM4.5 billion.

“Inflows in February helped to offset January’s outflows, bringing cumulative flows to RM2.2 billion in January and February,” it said in a research note today.

Net inflows were concentrated in Malaysian Government Securities (MGS) and Government Investment Issues (GII) in February, which drew in RM4.9 billion and RM800 million, respectively.

Foreign holdings of government bonds (MGS & GII) edged up to RM167 billion or 22.7% of total outstanding against RM161 billion or 22.2% in January.

However, foreigners sold more treasury bills (-RM800 million) and private debt securities (-RM400 million).

UOB said the re-entry of foreign funds into Malaysian bonds is in line with the stronger ringgit and abating sovereign risks.

“International rating agencies have reaffirmed ’s sovereign ratings with a stable outlook. ’s 5-year credit default swaps (CDS) has fallen to a year’s low of 61.”

On the currency front, UOB maintains its view that the ringgit will trade between 4.05 and 4.10 against the greenback before a subsequent move towards 4.15 and 4.18 by mid- and end-2019 respectively, premised on a resumption of Federal Reserve interest rate increases in June and December, lingering risks to growth as well as extended US- trade negotiations.

/ringgit edged up to 4.08/4.09 following the release of Bank Negara Malaysia’s monetary policy statement that sounded more cautious on growth with a dovish tilt. Other regional central banks also turned more dovish in February.”

Meanwhile, UOB said foreign funds pared down their holdings of Malaysian by RM800 million after a net buying of RM1 billion in January. This brought year-to-date equity inflows lower to RM200 million on a net basis. Foreign ownership of Malaysian held steady at 23.5%.

Source: The Sun Daily

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