• Foreign holdings of MYR debts securities increased to RM217.5bn
• Foreigners bought RM4.0bn of MGS and RM2.4bn of GII
• Total portfolio outflow of RM7.3bn for equities and debt securities combined
• Expect a heavy government bond supply in 2021

Foreign funds remained net buyer of Malaysian bonds for the sixth month in October (Oct: +RM8.0bn; Sep: +RM0.5bn; Aug: +RM3.0bn; Jul: +7.1bn) bringing total foreign ownership of MYR bonds to RM217.5bn or 13.6% as investors refocus back to riskoff assets amid concern on downside risk to growth from the recent spike of COVID19 infections. Gains were further anchored by positive vibes surrounding the MGS and GII space following series of sturdy demand from government bond auctions in October.

Looking into details, foreigners bought mainly Malaysian Government Securities (MGS) totalling RM4.0bn (Sep: +RM1.4bn; Aug: +RM3.2bn), Government Investment Issues (GII) of RM2.4bn (Sep: -RM0.3bn; Aug: -RM0.2bn), Malaysian Treasury Bills RM2.5bn (Sep: -RM0.4bn), as well as Private Debt Securities including Private Sukuk of RM0.1bn (Sep: -RM0.1bn). For MGS alone, foreign holdings rose to RMR173.2bn or 40.3% of total MGS outstanding (Sep: 38.7%; Aug: 39.2%). Foreign holdings of GII edged higher to RM22.6bn or 6.1% of total GII outstanding (Sep: 5.6%; Aug: 5.8%). Correspondingly, foreign holdings of government bonds (MGS & GII) rose by RM6.4bn to RM195.8bn or 24.5% of total outstanding (Sep: 23.8%; Aug: 24.0%).

As at end-October, foreign investors bought RM8.0bn of Malaysian bonds (Sep: +RM0.5bn; Aug: +RM3.0bn). Meanwhile, foreign net sell of Malaysia equities tapered to RM0.7bn in October, compared to RM2.0bn in September; this represents their 15th consecutive month of net sell (since Aug 2019). As a result, there was net inflows of RM7.3bn for equities and debt securities combined (Sep: - RM1.5bn; Aug: +1.5bn; Jul: +RM4.5bn; Jun: +RM8.6bn; May: -RM1.5bn; Apr: - RM4.7bn) in October. Year to date, foreign portfolio outflows totalled RM10.3bn in Jan-Oct with equity outflows of RM23.1bn outpacing debt inflows of RM12.8bn.

Source: BIMB Securities Research - 9 Nov 2020