Foreigners remained net buyer of Malaysian bonds

• Foreign holdings of MYR debts securities increased to RM209.0bn

• Foreigners bought RM3.2bn of MGS but sold RM0.2bn of GII

• Total portfolio inflow of RM1.5bn for equities and debt securities combined

• Bonds market awaits important MPC meeting on OPR

Foreign funds purchased RM3.0bn of domestic bonds for the fourth month in July (Jul: +7.1bn; Jun: +11.6bn; May: +RM1.5bn) as better global risk appetite aided MGS, on top of demand ahead of anticipated BNM rate cut this month.

Looking into details, foreigners bought Malaysian Government Securities (MGS) worth RM3.2bn (Jul: +RM7.7bn; Jun: +RM7.8bn; May: +RM1.9bn). However, foreign investors sold Government Investment Issues (GII) worth RM0.2bn (Jul: +RM0.2bn; Jun: +RM2.4bn; May: -RM0.5bn) and Malaysian Treasury bills (conventional and Islamic) worth RM5.3bn (Jul: +0.5bn; Jun: +1.6bn). Percentage wise, foreign holdings of MGS increased to 39.2% whilst foreign holdings of GII remained at 5.8% of the outstanding amount. Correspondingly, foreign holdings of Malaysian government bonds (MGS & GII) increased by RM3.0bn to RM188.3bn, which is equivalent to 24.0% of total outstanding (Jul: 23.5%; Jun: 23.0%; May: 21.9%). Foreign holdings of discount instruments were stable at RM8.2bn whilst foreign holdings of PDS declined RM0.1bn to RM12.4bn. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in August 2020 were higher by RM3.0bn, bringing total foreign ownership of MYR bonds to RM209.0bn or 13.3%.

As at end-August, foreign investors bought RM3.0bn of Malaysian bonds (Jul: +7.1bn; Jun: +RM11.6bn; May: +RM1.5bn; Apr: -RM2.0bn). This brings the cumulative bond inflows to RM4.3bn in Jan-Aug. Meanwhile, in the equity market, foreigners continued to sell RM1.5bn of equities in August, however, the net outflow for August is far lesser than July, where foreign investors sold shares amounted to - RM2.6bn. So far in 2020, net foreign outflows from Malaysian equities amounted to -RM20.4bn. As a result, there was net inflows of RM1.5bn for equities and debt securities combined (Jul: +RM4.5bn; Jun: +RM8.6bn; May: -RM1.5bn; Apr: - RM4.7bn) in July.

Source: BIMB Securities Research - 7 Sept 2020