• Foreign holdings of MYR debts securities fell to RM249.8bn in July

• Foreigners sold RM3.2bn of MGS and RM1.4bn of GII

• Total portfolio outflows of RM3.3bn for equities and debt securities combined

• Limited upside for yields

Foreign investors remained net sellers of Malaysia’s debt securities for the second straight month in July, albeit to a lesser extent. Foreign investors sold RM3.5bn (Jun: -RM4.2bn) from Malaysian capital, bringing accumulated total foreign holdings of Malaysia debt securities to RM249.8bn as at end-July.

Looking into details, the outflow was led by a larger net sell-off of Malaysian Government Securities (MGS) as foreign investors reduced their holdings of MGS by RM3.2bn (Jun: -RM0.9bn; May: +RM0.5bn) to RM185.7bn or 35.5% of total MGS outstanding. The outflow was partly offset by a smaller decrease in holdings of Government Investment Issues (GII) as overseas investors sell their holdings of GII by RM1.4bn (Jun: -RM3.4bn; May: -RM:0.2bn) to RM39.4bn or 8.9% of total GII. This resulted in foreign holdings of Malaysian government bonds (MGS & GII) to decline by RM4.6bn to RM225.1bn as at end-July, equivalent to 23.3% of total outstanding. Foreign holdings of PDS inched lower to RM13.2bn as RM0.2bn was sold for the month. Meanwhile, foreign holdings of discount instruments increased by RM1.3bn for the month as foreign investors bought Malaysian Islamic Treasury Bills (+RM1.3bn). As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in July 2022 were lower by RM3.5bn, bringing total foreign ownership of MYR bonds to RM249.8bn or 13.7%.

As at end-July 2022, foreign investors sold RM3.5bn of Malaysian bonds (Jun: - RM4.2bn; May: +RM0.5bn). Meanwhile, for the equity market, foreign investors returned as net buyers after 1-month of outflows and recorded a slight net inflow of RMM0.2bn in July (Jun: -RM1.3bn; May: +0.08bn). As a result, Malaysia recorded overall foreign portfolio outflow of RM3.3bn in July 2022 (Jun: -RM5.5bn; May: +RM0.6bn). Year to date, foreign portfolio outflows amounted to RM0.6bn as foreign investors have been net buyers of equity at RM6.2bn, but net sellers of bonds at RM6.8bn.

Source: BIMB Securities Research - 10 Aug 2022