• Foreign holdings of MYR debts securities increased to RM247.9bn in May

• Foreigners bought RM2.4bn of MGS but sold RM0.7bn of GII

• Total portfolio inflow of RM1.6bn for equities and debt securities combined

• MGS/GII yields may fall on impact of full-scale MCO 3.0

Foreign portfolio inflows of domestic bonds continued but eased to RM1.8bn (Apr: RM6.4bn; Mar: RM5.9bn) in May. Slower foreign flows into Malaysia’s capital markets in May was in line with the trend of easing non-resident portfolio flows into emerging markets. Still, this marks the thirteenth month of net foreign inflows entering domestic bonds which helped to offset continued net foreign outflows from Malaysian equities.

May’s debt inflows were primarily lifted by inflows of Malaysian Government Securities (MGS) and Malaysian Islamic Treasury Bills (MITB). Foreigners bought MGS totalling RM2.4bn (Apr: RM4.7bn; Mar: +RM1.5bn) and MTB worth RM0.3bn (Apr: +RM1.0bn; Mar: +RM1.6bn). However, foreigners sold GII of RM0.7bn (Apr: +RM0.5bn; Mar: +RM2.9bn). As a result, foreign holdings of MGS rose to RM191.7bn or 41.1% of total MGS outstanding and foreign holdings of GII decreased to RM30.5bn or 7.9% of total GII outstanding. Correspondingly, foreign holdings of government bonds (MGS & GII) rose by RM1.7bn to RM222.2bn or 26.1% of total outstanding. Foreigners also sold Malaysian Treasury Bills (May: -0.01bn; Apr: +RM0.5bn) and Private Debt Securities including private sukuk (May: -RM0.1bn; Apr: -RM0.3bn; Mar: +RM0.6bn; Feb: +RM0.3bn) whilst holdings of BNM notes was unchanged.

As at end-May 2021, foreign investors bought RM1.8bn of Malaysian bonds (Apr: +6.4bn; Mar: +RM5.9bn). Meanwhile, foreign flows in domestic equities were lower with a marginal net sell of RM0.2bn (Apr: -RM1.1bn; Mar: -RM0.03bn). Since the beginning of 2021, cumulatively, retailers have been the only net buyers of our equity market to the tune of RM6.5bn. Local institutions and foreign investors were net sellers to the tune of -RM3.4bn and -RM3.0bn, respectively. As a result, there was net inflows of RM1.6bn for equities and debt securities combined (Apr: +RM5.3bn; Mar +RM5.9bn) in May.

Source: BIMB Securities Research - 11 Jun 2021