• Foreign holdings of MYR debts securities increased to RM187.0bn

• Foreigners bought RM4.9bn of MGS and RM0.8bn of GII

• Total portfolio inflow of RM3.7bn for equities and debt securities combined

• Improved foreign sentiments could support bond flows

Foreign flows to Malaysia reversed to a net inflow of RM3.7bn in February following three straight months of outflows. This was on the back of RM4.5bn of foreign flows into domestic bonds. Meanwhile foreigners turn net sellers of equities of RM0.82b.

Higher risk aversion due to global growth concerns led foreign flows into bonds. Foreign investors bought Malaysia’s debt securities in February as total foreign holdings increased by RM4.5bn to RM187.0bn. Foreign flows went mainly to MGS as foreign holdings of MGS increased by RM4.9bn to RM149.3bn (Jan: RM144.4bn; Dec: 146.2bn; Nov: 147.6bn; Oct: RM153.0bn). Foreign investors increase their holdings of GII by RM0.8bn to RM17.4bn (Jan: RM16.6bn; Dec: RM15.9; Nov: RM14.9bn; Oct: RM14.7bn). Foreign holdings of Malaysian government bonds (MGS & GII) rose RM5.7bn to RM166.7bn, or 23.6% of total bonds outstanding in February. For MGS alone, foreign investors held 38.4% of total MGS outstanding.

Meanwhile, foreign holdings of discount instruments decreased by RM0.8bn to RM6.9bn as foreign investors sold Malaysian Treasury Bills (-RM77.5m) and Malaysian Islamic Treasury Bills (-RM0.7bn). Foreign holdings of PDS also decreased by RM0.4bn to RM13.4bn. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in February 2019 were higher by RM4.5bn, bringing total foreign ownership of MYR bonds to RM187.0bn or 13.0% (Jan: 12.8%).

As at end-February, international investors bought RM4.5bn of Malaysian bonds (Jan: -RM2.3bn) whilst the Malaysian equity market recorded total foreign net outflow of RM0.82bn (Jan: +RM1.03bn). This means a total portfolio inflow of RM3.7bn for equities and debt securities combined. Meanwhile, in the corresponding period, Malaysia’s foreign international reserves increased by USD0.3bn to USD102.4bn (Jan: USD102.1bn; Dec: USD101.4bn; Nov: USD102.0bn).

Source: BIMB Securities Research - 8 Mar 2019