• Foreign holdings of MYR debts securities rose to RM260.1bn in January

• Foreigners bought RM4.6bn of MGS but sold RM0.3bn of GII

• Total portfolio inflow of RM3.8bn for equities and debt securities combined

• More volatility ahead

Foreign investors remained net buyers of Malaysia’s debt securities in January 2022 as foreign investors continue buying RM3.5bn worth of domestic debt securities. Demand was likely driven by the return of global risk-on sentiment as Omicron fears began to subside.

Looking into details, January’s foreign debt inflows were largely into Malaysian Government Securities (MGS) as foreign investors increased their holdings of MGS by RM4.6bn (Dec: +RM2.4bn; Nov: -RM4.9bn; Oct: +RM2.7bn) to RM194.1bn or 39.6% of total MGS outstanding. However, there was a marginal declined in the holdings of GII by RM0.3bn (Dec: +RM3.9bn; Nov: +RM1.3bn; Oct: +RM2.7bn) to RM44.2bn or 10.4% of total GII outstanding. This resulted in foreign holdings of Malaysian government bonds (MGS & GII) to increase by RM4.3bn to RM238.3bn as at end-Jan, which was equivalent to 26.0% of total outstanding. Foreign holdings of discount instruments declined for the month as foreign investors sold both Treasury Bills (- RM0.4bn) and Islamic Treasury Bills (-RM0.6bn). Meanwhile, foreign holdings of PDS also dropped. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in January 2022 were higher by RM3.5bn, bringing total foreign ownership of MYR bonds to RM260.1bn or 14.8%.

As at end-Jan 2022, foreign investors bought RM3.5bn of Malaysian bonds (Dec’21: +RM6.2bn; Nov: -RM3.6bn; Oct: +RM3.0bn). Meanwhile, foreign investors continue to enter Malaysia equity market as foreign investors bought a net RM0.3bn of local equities (Dec: -RM1.1bn; Nov: +RM0.2bn; Oct: +RM1.6bn). Domestic institutions turned net sellers in the first month of 2022, at -RM0.4bn (Dec: +RM0.3bn; Nov: - RM1.3bn; Oct: -RM1.9bn), while retail investors bought RM0.09bn (Dec: +RM0.3bn; Nov: +RM1.1bn; Oct: +RM0.4bn). As a result, Malaysia recorded overall foreign portfolio inflow of RM3.8bn in January 2022 (Dec: +RM5.1bn; Nov: -RM3.4bn; Oct: +4.6bn).

Source: BIMB Securities Research - 11 Feb 2022