• Foreign holdings of MYR debts securities increased to RM254.0bn in October
• Foreigners bought RM2.7bn of MGS and RM2.7bn of GII
• Total portfolio inflow of RM4.6bn for equities and debt securities combined
• Yields to rise following unveiling of Budget 2022 and on Fed taper expectations

Malaysia continued to receive foreign portfolio inflows for the third consecutive month at RM3.0bn in Oct, bringing the accumulated total foreign holdings of Malaysia debt securities to RM254.0bn at end-October.

Looking into details, foreigners bought both MGS totalling RM2.7bn (Sep: -RM2.4bn; Aug: +RM3.1bn) and GII amounting RM2.7bn (Sep: +RM2.2bn; Aug: +RM3.2bn). This resulted in foreign holdings of Malaysian government bonds (MGS & GII) to increase by RM5.4bn to RM231.3bn as at end-Oct, which was equivalent to 25.9% of total outstanding. For MGS, foreign investors held RM192.0bn or 40.1% of total MGS outstanding as at end-Oct while foreign holdings of GII accumulated to RM39.3bn or 9.5% of total GII outstanding. Foreign holdings of discount instruments decreased by RM3.0bn to RM7.9bn as foreign investors sold both Treasury Bills (-RM2.7bn) and Islamic Treasury Bills (-RM0.3bn). Meanwhile, foreign holdings of PDS increased by RM0.5bn to RM14.8bn. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in October 2021 were higher by RM3.0bn, bringing total foreign ownership of MYR bonds to RM254.0bn or 14.7%.

As at end-Oct 2021, foreign investors bought RM3.0bn of Malaysian bonds (Sep: +RM0.6bn; Aug: +RM6.6bn). Meanwhile, foreign investors remained net buyers in Oct with higher net inflow of RM1.6bn (Sep: +RM0.7bn; Aug: +RM1.05bn). Domestic institutions remained net sellers in Oct at RM1.9bn (Sep: -RM1.7bn; Aug: -RM1.5bn), whilst domestic retail investors bought RM0.4bn (Sep: +RM0.9bn; Aug: +RM0.5bn), their 28th sequential month of net buy since July 2019. As a result, Malaysia recorded a higher overall foreign portfolio inflow of RM4.6bn in Oct (Sep: +1.3bn; Aug: +RM7.65bn). Since the beginning of 2021, the cumulative bond inflows were RM31.1bn (Jan-Oct 2020: RM12.8bn) whilst foreign outflows from Malaysian equities amounted to RM2.2bn (Jan-Oct 2020: -RM23.1bn). This resulted in YTD 2021 net inflows of RM28.9bn (Jan-Sep 2020: -RM10.3bn).

Source: BIMB Securities Research - 9 Nov 2021