• Foreign holdings of MYR debts securities increased to RM209.5bn

• Foreigners bought RM1.4bn of MGS but sold RM0.3bn of GII

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

• Malaysia’s continued inclusion in FTSE Russell WGBI to bode well for MYR bond market

Foreign funds remained net buyer of Malaysian bonds for the fifth month in September (Sep: +RM0.5bn; Aug: +RM3.0bn; Jul: +7.1bn) as there was demand for safer MGS and GII amid escalation in virus infections. However, foreigners remained net sellers of domestic equities, which was offset by domestic retail participation.

Looking into details, foreigners bought mainly Malaysian Government Securities (MGS) worth RM3.2bn (Aug: +RM1.4bn; Jul: +RM7.7bn; Jun: +RM7.8bn; May: +RM1.9bn) and Malaysian Treasury Bills worth RM0.05bn. This was partly offset by net selling of Government Investment Issues (GII) worth RM0.3bn (Aug: -RM0.2bn; Jul: +RM0.2bn; Jun: +RM2.4bn; May: -RM0.5bn), and Malaysian Islamic Treasury Bills of RM0.45bn. Correspondingly, foreign holdings of government bonds (MGS & GII) rose by RM1.1bn to RM189.4bn or 23.8% of total outstanding (Aug: 24.0%; Jul: 23.5%; Jun: 23.0%; May: 21.9%). For MGS alone, foreign holdings rose to RMR169.2bn or 38.7% of total MGS outstanding (Aug: 39.2%; Jul: 38.2%). Foreign holdings of GII edged lower to RM20.2bn or 5.6% of total GII outstanding (Aug: 5.8%; Jul: 5.8%). As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in September 2020 were higher by RM0.5bn, bringing total foreign ownership of MYR bonds to RM209.5bn or 13.2%.

As at end-September, foreign investors bought RM0.5bn of Malaysian bonds (Aug: +RM3.0bn; Jul: +7.1bn; Jun: +RM11.6bn; May: +RM1.5bn; Apr: -RM2.0bn). This brings the cumulative bond inflows to RM4.8bn in Jan-Sep. Meanwhile, in the equity market, foreigners were net seller to the tune of -RM1.97bn, bigger than the preceding August at -RM1.5bn worth of equities. So far in 2020, net foreign outflows from Malaysian equities amounted to -RM22.4bn. As a result, there was net outflows of RM1.5bn for equities and debt securities combined (Aug: +1.5bn; Jul: +RM4.5bn; Jun: +RM8.6bn; May: -RM1.5bn; Apr: -RM4.7bn) in September.

Source: BIMB Securities Research - 8 Oct 2020