• Foreign holdings of MYR debts securities increased to RM257.7bn in May

• Foreigners bought RM0.5bn of MGS but sold RM0.2bn of GII

• Total portfolio inflows of RM0.6bn for equities and debt securities combined

• Yields to rise in tandem with higher US Treasury yields

Total foreign holdings of Malaysia debt securities increased marginally in May. Foreign investors bought RM0.5bn from Malaysian capital, bringing accumulated total foreign holdings of Malaysia debt securities to RM257.5bn as at end-May.

Looking into details, foreign investors increased their holdings of MGS slightly by RM0.5bn (Apr: -RM2.1bn; Mar: -RM3.2bn) to RM189.8bn or 37.4% of total MGS outstanding. Overseas investors however continued to sell their holdings of GII albeit by a lower amount of RM0.2bn (Apr: -RM0.5bn; Mar: -RM1.0bn) to RM44.2bn or 10.1% of total GII outstanding as at end-May. This resulted in foreign holdings of Malaysian government bonds (MGS & GII) to increase by RM0.3bn to RM234.0bn as at end-May, equivalent to 24.7% of total outstanding. Foreign holdings of PDS inched up to RM13.5bn as RM0.1bn was bought for the month. Meanwhile, foreign holdings of discount instruments also increased by RM0.1bn for the month as foreign investors bought Malaysian Treasury Bills (+RM0.5bn). As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in May 2022 were higher by RM0.5bn, bringing total foreign ownership of MYR bonds to RM257.5bn or 14.4%.

As at end-May 2022, foreign investors bought RM0.5bn of Malaysian bonds (Apr: - RM2.1bn; Mar: -RM4.1bn). Meanwhile, foreign investorsrecorded a fifth consecutive month of net buying though at a much slower pace as investors posted a fall in net buy of Malaysian equities to RM77.3m in May (Apr: +0.8bn; Mar: +RM3.3bn). Domestic institutions remained net sellers in May at RM0.59bn whilst domestic retail investors bought RM0.51bn. As a result, Malaysia recorded overall foreign portfolio inflow of RM0.6bn in May 2022 (Apr: -RM1.3bn; Mar: -RM0.8bn). Year to date, foreign portfolio inflows amounted to RM8.2bn as foreign investors have been net buyers of both bonds and equity at RM0.9bn and RM7.3bn, respectively.

Source: BIMB Securities Research - 9 Jun 2022