-  The international reserves of Bank Negara Malaysia (BNM) amounted to USD134.9bil (equivalent to RM441.7bil) as at December 31, 2013.

-  Foreign reserves slipped by another USD1.4bil (or -1.0% MoM) as outflow of short-term funds persisted in December (November: -0.6% MoM).

-  Cumulatively, overall reserves in USD terms had deteriorated by 3.4% in 2013 when compared to +4.5% in 2012.

-  In Ringgit denomination, the international reserves had increased due to forex translation gains. Reserves advanced by 3.4% YoY to RM441.7bil in 2013 (end-2012: RM427.2bil).

-  Also, the higher reserves in Ringgit terms reflect the continuous current account surplus and inflows of foreign direct investment.

-  From year-end 2012, the Ringgit had weakened by 7.1% against the greenback to close at RM3.2755 per USD on December 31, 2013.

-  The reserves position is sufficient to finance 9.6 months of retained imports and is 3.7 times the short-term external debt.

-  Elsewhere, the amount of surplus funds in Malaysia’s financial system had deteriorated by 21.9% YTD to RM261.0bil as of November 2013.

-  Despite the unwinding of the stimulus in the US and the reversal of international carry trades, we envisage the international reserves to remain sizable supported by trade and investment inflows.

-  As a recap, reserves at BNM grew by 33.7% from the time QE2 was initiated in November 2010 until May 2013 when the reserves reached an all-time high of USD141.4bil.

-  In December, foreigners were net sellers of Malaysian equities. Foreign net selling of equities amounted to RM1.66bil (vs. net selling of RM3.11mil in November).

-  In terms of trading participation, foreigners contributed 45.3% (or RM14.36bil) to total trading value in December. 

Source: AmeSecurities