• Foreign holdings of MYR debts securities declined to RM187.8bn

• Foreigners sold RM12.4bn of MGS and GII

• Total portfolio outflow of RM17.7bn for equities and debt securities combined

• A tantrum-like outflow could be larger but additional measures has thus far calmed risk sentiment

Foreign flows recorded the largest monthly outflows in two years since May 2018 totalling RM17.7bn in March (Feb: -RM10.2; Jan: +RM3.4bn) in tandem with the exit of capital flows from emerging markets amid Covid-19 fears.

Malaysian debt securities recorded a net outflow of RM12.2bn in March, bringing YTD debt outflows to RM16.9bn in 1Q20 (1Q19: +RM5.2bn). Looking into details, foreign selling was concentrated on Malaysian Government Securities (MGS) where RM12.5bn was sold (Feb: -RM7.1bn; Jan: +RM.3bn). Government Investment Issues (GII) however recorded a small inflows of RM0.1bn (Feb: -RM0.5bn; Jan: -RM0.2bn). Percentage wise, foreign holdings of MGS decreased to 36.8% whilst foreign holdings of GII dropped to 5.7% of the outstanding. Correspondingly, foreign holdings of Malaysian government bonds (MGS & GII) declined by RM12.4bn to RM168.1bn, which is equivalent to 23.1% of total outstanding (Feb: 23.9%; Jan: 25.3%).

Foreign holdings of discount instruments increased by RM0.3bn to RM6.9bn whilst foreign holdings of PDS declined by RM0.1bn to RM12.8bn. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in March 2020 were lower by RM12.2bn, bringing total foreign ownership of MYR bonds to RM187.8bn or 12.3%.

As at end-Mar, foreign investors sold RM12.2bn of Malaysian bonds (Feb: -RM8.2bn; Jan: +RM3.5bn). Meanwhile, international investors continued to shy away from Malaysian equities for the ninth-consecutive month, decreasing their holdings by RM5.5bn in March (Feb: -RM2.0bn; Jan: -RM0.1bn), the largest monthly foreign net outflow since May 2018 which saw international funds taking out -RM5.6bn. Foreign outflows from Malaysian equities was RM7.6bn in 1Q20 and combined with RM16.9bn outflows from Malaysian bonds, this brings the total amount of foreign outflows to RM24.5bn in 1Q20 (1Q19: +RM6.4bn).

Source: BIMB Securities Research - 8 Apr 2020