- Foreign shareholdings of MGS eased in April 2014, the first MoM decline in six months. Foreign holdings of MGS eased off by RM5.3bil or 3.7% MoM to RM135.5bil in April 2014, from RM140.8bil in March 2014. This is the first MoM decline in six months.

- Foreign holdings level of outstanding MGS, as a percentage of total MGS, was unchanged at 44.1% in April 2014. In terms of percentage of total outstanding MGS, the foreign holdings level was unchanged at 44.1% in April 2014 vs. 44.1% in March 2014, decrease in the MGS denominator base as well.

- Excluding foreign holdings of MGS, the system loan-to-adjusted-deposit ratio is estimated at 89.3% in April 2014. Excluding foreign holdings in MGS, we estimate the industry’s gross loan-to-adjusted-deposit ratio to be at 89.3% in April 2014, somewhat easing marginally from 89.5% in March 2014.

- Official industry LDR ratio was unchanged at 85.1%. The official industry’s loan-to-deposit ratio (LDR) was unchanged at 85.1% in April 2014, when compared to 85.1% in March 2014. The April 2014’s official industry LDR data still marks the fourth consecutive month of LDR remaining above 85%. Industry LDR is still at the highest in more than ten years since January 2004’s 85.9%.

- Excess liquidity is broadly unchanged. Overall excess net deposit (total deposit less loans) was marginally lower at RM297bil in April 2014, when compared to RM298bil in March 2014. Excluding foreign holdings of MGS, we estimate excess net deposit (gross deposit less loans less foreign holdings in MGS) to have improved though to RM162bil in April 2014, against RM157bil in March 2014.

- MGS yields were stable. MGS yields were stable, with the 10-year MGS yield unchanged at 4.11% as at end-April 2014, from 4.11% in end-March.

- Maintain NEUTRAL. Based on latest industry overall data, we are maintaining 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