• Foreign holdings of MYR debts securities increased to RM192.3bn
• Foreigners bought RM4.7bn of MGS and RM0.3bn of GII in October
• Total portfolio inflow of RM6.4bn for equities and debt securities combined
• Gross supply of MGS/GII in 2018 revised higher

International funds staged a solid comeback to Malaysia’s debt securities as they turned net buyers after two straight months of selling. Foreign holdings of MYR debt securities increased by RM7.8bn to RM192.3bn in October. On a cumulative basis, total foreign selling of bonds now stands at -RM14.5bn in Jan-Oct.

Foreign holdings of MGS in October increased by RM4.7bn to RM153.0bn (Sep: RM148.3bn; Aug: RM153.9bn; Jul: 154.4bn; Jun: RM150.9bn) whilst foreign investors increase their holdings of GII by RM0.3bn to RM14.7bn (Sep: RM 14.4bn; Aug: RM13.2bn; Jul: 13.8bn; Jun: RM14.3bn). Given the net inflow of RM5.0bn to RM167.7bn in foreign ownership of government debt (MGS + GII), total foreign holding in government debt edged to 25.0% from 24.1% in Sept.

Meanwhile, foreign holdings of discount instruments increased by RM1.4bn to RM10.0bn as foreign investors bought Malaysian Treasury Bills (+RM0.4bn) and BNM Notes and Bills (+RM1.0bn). Foreign holdings of PDS also increased by RM1.4bn to RM14.6bn. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in October 2018 were higher by RM7.8bn, bringing total foreign ownership of MYR bonds to RM192.3bn or 13.7%.

As at end-Oct, foreigners turned net buyers of Malaysian bonds (RM7.8bn) however the Malaysian equity market recorded a net outflow of RM1.4bn as regional equity markets suffered a broad sell down during the month. This means a total portfolio inflow of RM6.4bn for equities and debt securities combined (Sep: -RM2.8bn; Aug: - RM2.5bn; Jul: +2.3bn). In the corresponding period, Malaysia’s foreign international reserves fell for the fourth straight month by USD1.3bn to USD101.7bn (Sep: USD103.0bn; Aug: USD104.4bn; July: USD104.5bn), its lowest level in a year.

Source: BIMB Securities Research - 9 Nov 2018