• Foreign holdings of MYR debts securities declined to RM184.8bn
• Foreigners sold RM1.4bn of MGS and bought RM1.0bn of GII
• Total portfolio outflow of RM3.34bn for equities and debt securities combined
• Higher gross MGS/GII supply in 2019 is unlikely to derail the market

Foreign funds remained net seller of domestic debts with a net loss of RM2.3bn in December. This brought the total stock of foreign holdings lower to RM184.8bn in December, equivalent to 13.1%. For the whole of 2018, foreign outflows from ringgit bonds expanded to RM22.0bn.

Foreign holdings of MGS in December decreased by RM1.4bn to RM146.2bn (Nov: 147.6bn; Oct: RM153.0bn; Sep: RM148.3bn; Aug: RM153.9bn; Jul: 154.4bn). On the other hand, foreign investors increase their holdings of GII further by RM1.0bn to RM15.9bn (Nov: RM14.9bn; Oct: RM14.7bn; Sep: RM 14.4bn; Aug: RM13.2bn; Jul: 13.8bn). Given the net outflow of RM0.4bn to RM162.1bn in foreign ownership of government debt (MGS + GII), total foreign holding in government debt edged lower to 23.7% from 24.0% in Nov.

Meanwhile, foreign holdings of discount instruments decreased by RM1.6bn to RM8.7bn as foreign investors sold Malaysian Treasury Bills (-RM1.2bn) and Malaysian Islamic Treasury Bills (-RM0.4bn). Foreign holdings of PDS also decreased by RM0.3bn to RM14.0bn. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in December 2018 were lower by RM2.3bn, bringing total foreign ownership of MYR bonds to RM184.8bn or 13.1%.

As at end-Dec, foreigners turned net sellers of Malaysian bonds (RM2.3bn) whilst the Malaysian equity market recorded total foreign net outflow of -RM1.04bn. This means a total portfolio outflow of RM3.34bn for equities and debt securities combined (Nov: 5.92bn; Oct: +RM6.4bn; Sep: -RM2.8bn; Aug: -RM2.5bn; Jul: +2.3bn). In the corresponding period, Malaysia’s foreign international reserves decreased by USD0.6bn to USD101.4bn (Nov: USD102.0bn; Oct: USD101.7bn; Sep: USD103.0bn; Aug: USD104.4bn; July: USD104.5bn).

Source: BIMB Securities Research - 9 Jan 2019