- Foreign shareholdings of MGS rose slightly in January 2014. Foreign holdings of MGS rose slightly by RM0.8bil or 0.6% MoM in January 2014. Thus, foreign holdings of MGS have increased slightly to RM137.9bil in January 2014, compared to RM137.1bil in December 2013.

- Foreign holdings in outstanding MGS as percentage of total MGS is now lower at 44.6% in January 2014. In terms of percentage of total outstanding MGS, the foreign holdings level is now at 44.6% in January 2014, vs. 44.9% in December 2013. This is due to the expanded MGS base, to RM309.1bil in January 2014, from RM305.1bil in December 2013.

- Excluding foreign holdings of MGS, the system net loan-to-deposit ratio is now at 89%. We estimate that the system loan-to-deposit ratio to be at 88.9% in January 2014 (December 2013: 88.7%), if excluding foreign holdings in MGS.

- Current LDR has now surpassed 85%. As it is, the current industry’s loan-to-deposit ratio (LDR) has now surpassed the 85% level, coming in at 85.5% in January 2014 (December 2013: 84.6%). This is the highest level in close to ten years.

- MGS yields remain comparatively high. MGS yields have eased somewhat after reaching recent peaks in end-January 2013. The 10-year MGS yield came off to 4.11% at end-February, after reaching a recent high of 4.3% at end-January 2014. The level remained elevated when compared to 4.09% in early August, when there was greater outflow of foreign holdings in MGS in July-August 2013.

- Maintain NEUTRAL. We maintain our stance of a likely less ample domestic liquidity situation ahead, given the high foreign holdings of MGS. Maintain NEUTRAL on the sector. 

Source: AmeSecurities