Bimb Research Highlights

Author: kltrader   |   Latest post: Fri, 19 Feb 2021, 5:16 PM


Economics - Foreign holdings of Malaysia government bonds reach 4-year high

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  • Foreign holdings of MYR debts securities increased to RM223.0bn
  • Foreigners bought RM2.3bn of MGS and RM1.4bn of GII
  • Total portfolio inflow of RM2.9bn for equities and debt securities combined
  • Malaysia still provides attractive real yields

Foreign portfolio inflows persisted in December as foreigners continued to snap up Malaysian debt securities by RM3.5bn (Nov: +RM1.9bn; Oct: +RM8.0bn). This marks the eighth month of net foreign inflows entering domestic bonds which helped to offset continued net foreign outflows from Malaysian equities. Foreign inflows primarily entered Malaysian government securities that lifted foreign holdings of MGS and GII by RM3.7bn to a 4-year high of RM202.1bn of total outstanding in December (Oct 2016: RM214.9bn).

Looking into details, foreigners bought mainly Malaysian Government Securities (MGS) totalling RM2.3bn (Nov: +RM1.8bn; Oct: +RM4.0bn), and Government Investment Issues (GII) of RM1.4bn (Nov: +RM0.8bn; Oct: +RM2.4bn). For MGS alone, foreign holdings rose to RMR177.3bn or 40.6% of total MGS outstanding (Nov: 40.1%; Oct: 40.3%). Foreign holdings of GII increased to RM24.8bn or 6.6% of total GII outstanding (Nov: 6.3%; Oct: 6.1%). Correspondingly, foreign holdings of government bonds (MGS & GII) rose by RM3.7bn to RM202.1bn or 24.9% of total outstanding (Nov: 24.6%; Oct: 24.5%).

As at end-December, foreign investors bought RM3.5bn of Malaysian bonds (Nov: +RM1.9bn; Oct: +RM8.0bn; Sep: +RM0.5bn; Aug: +RM3.0bn). Meanwhile, foreign net selling of Malaysia equities decelerated to RM0.6bn in December, compared to RM1.0bn in November; this represents their 17th consecutive month of net sell (since Aug 2019). As a result, there was net inflows of RM2.9bn for equities and debt securities combined (Nov: +RM0.9bn; Oct: +7.3bn) in December. For the full year of 2020, foreign portfolio flows returned to outflow of RM6.5bn (2019: +RM8.8bn; 2018: -RM33.6bn). Strong foreign purchases of Malaysian debt securities (2020: +RM18.2bn; 2019: +RM19.9bn; 2018: -RM22.0bn) was the sole contributor to overall foreign portfolio inflows last year, which was not enough to offset foreign outflows from the Malaysian equity market (2020: -RM24.7bn; 2019: -RM11.1bn; 2018: - RM11.9bn).

Source: BIMB Securities Research - 11 Jan 2021

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