Foreign portfolio flows recover in September

• Foreign holdings of MYR debts securities increased to RM189.1bn

• Foreigners bought RM0.5bn of MGS

• Total portfolio inflow of RM0.34bn for equities and debt securities combined

• FTSE Russell maintains Malaysia on WGBI a positive for Malaysia’s bond market

Foreign flows into Malaysia’s debt assets improved in September, reversing the selling trend in August. Foreign investors bought Malaysia’s debt securities in September as total foreign holdings increased by RM0.9bn to RM189.1bn. Foreign holdings of MGS increased by RM0.5bn to RM154.2bn (Aug: RM153.7bn; Jul: RM154.7; Jun: RM149.1bn). While total amount of foreign holdings of GII was flattish, the foreign share of GII ticked higher to 4.7% (Sep: RM15.3bn; Aug: RM15.3bn; Jul: RM14.7bn; Jun: RM14.7bn). These increased foreign holdings of Malaysian government bonds (MGS & GII) by RM0.5bn to RM169.5bn, or 22.9% of total bonds outstanding in September. For MGS alone, foreign investors held 37.5% of total MGS outstanding. Foreign holdings of discount instruments increased by RM0.3bn to RM7.6bn as foreign investors bought Malaysian Treasury Bills. Foreign holdings of PDS increased slightly by RM0.1bn to RM12.0bn. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in September 2019 were higher by RM0.9bn, bringing total foreign ownership of MYR bonds to RM189.1bn or 12.6%.

As at end-September, international investors bought RM0.9bn of Malaysian bonds (Aug: -RM0.1bn; Jul: +RM5.7bn) whilst foreign investors continued to sell equities albeit at a slower pace (Sep: -RM559m; Aug: -RM2.6bn; Jul: -RM79m). This means a total portfolio inflow of RM0.34bn for equities and debt securities combined. Meanwhile, Bank Negara Malaysia’s (BNM) international reserves fell USD0.5bn to USD103.0bn as at end-Sep from USD103.5bn as at end-Aug. It remains sufficient to finance 7.6 months of retained imports and is 1.1 times total short-term external debt.

Source: BIMB Securities Research - 8 Oct 2019