• Foreign holdings of MYR debts securities decreased to RM180.1bn

• Foreigners sold RM3.6bn of MGS and RM3.5bn of GII

• Total portfolio outflow of RM11.3bn for equities and debt securities combined

• The strongest foreign outflows in 10 months

Foreign buying interest was relatively muted in April amid market concerns surrounding news of Norwegian funds reducing their bond holdings from ten EMs including Malaysia, and FTSE Russell’s surprise announcement that they may remove Malaysia from its world government bond index. This brought the total stock of foreign holdings lower to RM180.1bn in April, equivalent to 12.5%. On a YTD basis, foreign outflows from ringgit bonds expanded to RM4.7bn.

Foreign investors sold Malaysia’s debt securities in April as total foreign holdings decreased by RM9.9bn to RM180.1bn. Foreign holdings of MGS declined by RM3.6bn to RM147.1bn (Mar: 150.7bn; Feb: RM149.3bn; Jan: RM144.4bn). Foreign investors also reduced their holdings of GII by RM3.5bn to RM15.2bn (Mar: RM18.7; Feb: RM17.4bn; Jan: RM16.6bn). Given the net outflow of RM7.1bn to RM162.3bn in foreign ownership of government debt (MGS + GII), total foreign holding in government debt edged lower to 22.7% from 23.7% in Mar.

Foreign holdings of discount instruments edged lower by RM1.2bn to RM5.9bn as foreign investors sold Malaysian Treasury Bills (RM1.1bn) and Malaysian Islamic Treasury Bills. Foreign holdings of PDS also decreased by RM1.6bn to RM11.9bn. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in April 2019 were lower by RM9.9bn, bringing total foreign ownership of MYR bonds to RM180.1bn or 12.5% (Mar: 13.1%).

As at end-April, international investors sold RM9.9bn of Malaysian bonds (Mar: +RM3.0; Feb: +4.5bn; Jan: -RM2.3bn) whilst the Malaysian equity market recorded total foreign outflow of RM1.4bn (Mar: -RM1.6bnFeb: -RM0.82bn; Jan: +RM1.03bn). This means a total portfolio outflow of RM11.3bn for equities and debt securities combined. Meanwhile, in the corresponding period, Malaysia’s foreign international reserves increased by USD0.4bn to USD103.4bn (Mar: USD103.0bn; Feb: USD102.4bn; Jan: USD102.1bn).

Source: BIMB Securities Research - 9 May 2019