Hedge Funds
Norway Pension+FTSE World Government Bond Index (WGBI)=Game started
paperplane
Publish date: Wed, 17 Apr 2019, 11:01 AM
AmBank Research sees Norway's sovereign wealth fund pullout from Malaysia's government bonds under its streamlining exercise to be gradual and the outflow will not cause a major impact.
Norway’s Government Pension Fund Global (GPFG) holds US$1.96bil (RM8.0bil) or 5.3% of Malaysia's government securities (MGS) as at end-March 2019.
“If the entire RM8.0bil flows out of our MGS at the same time, it will impact the ringgit against the US dollar, weakening the local currency by 0.62% while the 10-year MGS yield will rise by 7bps.
“However, we believe the outflow of the RM8.0bil will be gradual and hence will not cause a major impact,” it said in a research note on Thursday.
GPFG, which is the world's largest, announced it would streamline its US$300bil fixed-income portfolio by cutting emerging market bonds from the benchmark index it tracks. This would impact Malaysia and nine other countries.
Currently worth US$1.05 trillion, GPFG has invested around 30% in fixed income and the balance 70% in equities. Its latest decision did not affect the equities market.
AmBank Research said besides the fund’s fairly low exposure of 5.3% to total foreign holdings in Malaysia's MGS, “the strong liquidity in our bond market, added with healthy macro fundamentals such as steady growth, healthy reserves, current account surplus, low inflation and real money flows should support yields”.
The research house is projecting the 10-year MGS yield at 3.75% to 3.80% as our “prudent” levels with room to reach 3.70% if a 25bps Overnight Policy Rate rate cut is instituted.
If there is no rate cut, it expects the10-year yield to move back to its original levels of 3.90% to 4%.
“We expect total gross issuance of MGS/GII in the primary market for 2019 to hover between RM120bil and RM125bil with the ringgit corporate bond and Sukuk market total issuance at RM80bil to RM85bil for the year,” it said.
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2 people like this. Showing 14 of 14 comments
Total outflows coming= USD3-5bil+ USD1.9bil= around USD7bil=MYR28bil from Malaysia capital market.
2019-04-17 11:02
Shopping time...hehe...hope a bit recover for our market...
https://www.reuters.com/article/us-china-economy-gdp/china-first-quarter-gdp-growth-set-to-slow-to-6-3-percent-more-policy-support-needed-idUSKCN1RS2F1
2019-04-17 11:09
well msia mkt like others is affected by the trade war and nothing else..
once trade war over, it wld recover
2019-04-17 11:11
I was told someone frightened the mkt again... Haha
Good time to get ready
2019-04-17 17:15
Uob forum today. Another one expecting rate cut. Time to have some property? Or buy property 2H?
2019-04-17 17:17
(2.6m shares buyback April ) Philip
It is a really good time to go all in. Fixed deposit rates at 5% CIMB latest offer, Maybank is giving out 6.4% dividends at trailing prices. A lot of good companies selling at cheap prices with his performance.
At this rate buying companies instead of industries and indexes is more important than ever.
2019-04-19 12:26
2.6m shares buyback April ) Philip It is a really good time to go all in. Fixed deposit rates at 5% CIMB latest offer, Maybank is giving out 6.4% dividends at trailing prices. A lot of good companies selling at cheap prices with his performance.
At this rate buying companies instead of industries and indexes is more important than ever.
============
that is why Philips is a successful investor..........
The Mahathir Daim Master plan will work. After 3 election defeats, after bond threat above, after 1 year of austerity. after 1 year of review, Mahathir Daim is ready to act...................and they will succeed to revive the stock market, they always succeeds........................................
2019-04-23 22:05
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paperplane
Malaysia’s market accessibility level is in danger of being downgraded under the FTSE’s global classification framework.
This will see Malaysia fall out of the World Government Bond Index (WGBI), which it has been a part of since 2004, to the Emerging Markets Government Bond Index (EMGBI).
“FTSE Russell Watch List of fixed income markets being considered for potential reclassification includes China and Malaysia.
“Malaysia, currently assigned a '2' and included to the WGBI since 2004, is being considered for a potential downgrade to ‘1’ which would render Malaysia ineligible for inclusion in the WGBI,” read a statement released by FTSE Russell yesterday.
However, it noted that FTSE Russell will continue to engage with local regulators and market participants in Malaysia to assess the potential changes to the classification.
Malaysia’s inclusion on the watch list for potential reclassification is not a guarantee of the reclassification, it said.
“These markets will be reassessed against the WGBI eligibility criteria at the September 2019 review.
“Any WGBI inclusion or exclusion changes resulting from the review and the timetable for their implementation will be announced shortly thereafter,” the statement read.
FTSE Russell also noted that in implementing this framework, countries currently included in the WGBI were assigned a preliminary market accessibility level of ‘2,’ while countries currently included in the EMGBI, but not in the WGBI, were assigned level ‘1’.
Bloomberg reported that the ringgit’s decline today was partly due to concerns about Malaysia possibly being dropped from the WGBI, as well as due to falling oil prices.
According to Singapore’s Mizuho Bank Ltd head of economics and strategy Vishnu Varathan, the ringgit is also affected by headlines from former prime minister Najib Abdul Razak’s trial related to 1MDB, as well as Malaysia’s dispute with the European Union over palm oil.
'Euphoria about Malaysian stocks has faded'
Bloomberg also reported today that the benchmark FTSE Bursa Malaysia KLCI Index is down 14 percent from a record in May 2018, calling it the “worst major market in the world so far this year” as it has slipped 3.6 percent.
“Hopes of luring back global investors to a battered stock market are dimming by the day for Malaysia’s government,” the financial daily reported.
Samsung Asset Management Co reportedly said the gloomy outlook for the Malaysian stock market is not likely to lift anytime soon.
“Malaysia will likely disappoint over the next year because since the new government came in power in May 2018, it has been lowering public debt with fiscal tightening.
“This will be the theme from May 2018 to May 2020,” said Alan Richardson, a regional fund manager at Samsung Asset in Hong Kong.
Now that it has been almost one year since Pakatan Harapan took over the government, euphoria about Malaysian stocks has faded, reported Bloomberg.
This is due to the new government’s struggle with cleaning up corruption and inefficiency within the administration.
The Harapan government also lowered its 2019 economic growth forecast last month, and has been on an austerity drive to rein in its budget deficit.
According to data compiled by Bloomberg, foreign investors have dumped over US$500 million worth of Malaysian shares so far this year.
However, the business daily noted that Jakarta-based fund manager at Aberdeen Standard Investments Bharat Joshi said he was “neutral” on Malaysia stocks.
Meanwhile, Richardson noted that his dim view of Malaysian stocks was not because there was a downside risk, but “just that there is nothing to be positive about over the next 12 months”.
2019-04-17 11:01