• Foreign holdings of MYR debts securities declined to RM253.3bn in June

• Foreigners sold RM0.9bn of MGS and RM3.4bn of GII

• Total portfolio outflows of RM5.5bn for equities and debt securities combined

• Domestic yields to decline on falling global yields

Malaysia debt securities witnessed foreign outflows in June, hit by worries over aggressive tightening measures to curb soaring inflation. Foreign investors sold RM4.2bn from Malaysian capital, bringing accumulated total foreign holdings of Malaysia debt securities to RM253.3bn as at end-June.

Looking into details, foreign investors reduced their holdings of MGS slightly by RM0.9bn (May: +RM0.5bn; Apr: -RM2.1bn) to RM188.9bn or 36.5% of total MGS outstanding. Overseas investors continued to sell their holdings of GII by a higher amount of RM3.4bn (-RM:0.2bn; Apr: -RM0.5bn) to RM40.8bn or 9.2% of total GII outstanding as at end-June. This resulted in foreign holdings of Malaysian government bonds (MGS & GII) to decline by RM4.3bn to RM229.7bn as at end-June, equivalent to 23.9% of total outstanding. Foreign holdings of PDS inched lower to RM13.4bn as RM0.1bn was sold for the month. Meanwhile, foreign holdings of discount instruments increased by RM0.2bn for the month as foreign investors bought Malaysian Islamic Treasury Bills (+RM1.2bn). As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in June 2022 were lower by RM4.2bn, bringing total foreign ownership of MYR bonds to RM253.3bn or 14.0%.

As at end-June 2022, foreign investors sold RM4.2bn of Malaysian bonds (May: +RM0.5bn; Apr: -RM2.1bn). Meanwhile, foreign selling of Malaysian equities on Bursa Malaysia ballooned to RM1.3bn in June (May: +0.08bn; Apr: +0.8bn). Domestic institutions returned as net buyer in June at RM0.8bn while local retailers maintained their net buying spree and bought RM0.5bn. As a result, Malaysia recorded overall foreign portfolio outflow of RM5.5bn in June 2022 (May: +RM0.6bn; Apr: -RM1.3bn). Year to date, foreign portfolio inflows amounted to RM2.7bn as foreign investors have been net buyers of equity at RM6.0bn, but net sellers of bonds at RM3.3bn.

Source: BIMB Securities Research - 11 Jul 2022