• Foreign holdings of MYR debts securities increased to RM182.6bn

• Foreigners bought RM5.8bn of MGS

• Total portfolio inflow of RM6.83bn for equities and debt securities combined

• Local bond yields track falling global yields amid muted inflation

Malaysia’s capital market registered a net inflow of foreign funds with a net gain of RM6.83bn in June, driven by foreign debt holdings in June. June’s improvement was primarily attributable to a net increase of Malaysian Government Securities (MGS), reflecting a robust demand and appetite on government papers

Foreign investors bought Malaysia’s debt securities in June as total foreign holdings increased by RM6.7bn to RM182.6bn. Foreign holdings of MGS increased by RM5.8bn to RM149.1bn (May: 143.3bn; Apr: RM147.1bn; Mar: 150.7bn; Feb: RM149.3bn; Jan: RM144.4bn). Foreign investors maintained their holdings of GII at RM14.7bn (May: RM14.7bn; Apr: RM15.2bn; Mar: RM18.7; Feb: RM17.4bn; Jan: RM16.6bn). Given the net inflow of RM5.8bn to RM163.8bn in foreign ownership of government debt (MGS + GII), total foreign holding in government debt edged higher to 22.3% from 21.7% in May.

Foreign holdings of discount instruments increased by 0.9bn to RM6.8bn as foreign investors bought Malaysian Treasury Bills (RM0.9bn). Foreign holdings of PDS remained stable at RM12.0bn. As a result, in combined amounts (inclusive of shortterm bills/notes and corporate bonds/sukuk), foreign holding levels in June 2019 were higher by RM6.7bn, bringing total foreign ownership of MYR bonds to RM182.6bn or 12.2% (May: 11.9%).

As at end-June, international investors bought RM6.7bn of Malaysian bonds (May: - RM4.2bn; Apr: -RM9.9bn; Mar: +RM3.0) whilst foreign investors acquired RM134.6m from equities (May: -RM2.04bn; Apr: -RM1.4bn; Mar: -RM1.6bn), the first foreign net inflow in five months. This means a total portfolio inflow of RM6.83bn for equities and debt securities combined. Meanwhile, in the corresponding period, Malaysia’s foreign international reserves increased by USD0.4bn to USD102.7bn (May: USD102.3bn; Apr: USD103.4bn; Mar: USD103.0bn).

Source: BIMB Securities Research - 8 Jul 2019