• Foreign holdings of MYR debts securities declined to RM254.9bn in September

• Foreigners sold RM2.6bn of MGS and bought RM0.1bn of GII

• Total portfolio outflows of RM2.1bn for equities and debt securities combined

• GE15 to keep bond yields bias to the upside

Malaysia debt securities witnessed foreign outflows in September and the MYR continued its losing streak vs. the USD amid hawkish monetary settings by major central banks. Foreign investors sold RM0.5bn from Malaysian capital, bringing accumulated total foreign holdings of Malaysia debt securities to RM254.9bn as at end-September.

Looking into details, foreign investors reduced their holdings of Malaysian Government Securities (MGS) by RM2.9bn (Aug: +RM3.4bn; Jul: -RM3.2bn; Jun: - RM0.9bn) to RM186.5bn or 35.9% of total MGS outstanding. The Government Investment Issues (GII) attracted net purchases as overseas investors added RM0.1bn to their holdings of GII (Aug: +RM0.2bn; Jul: -RM1.4bn; Jun: -RM3.4bn) to RM39.7bn or 8.6% of total GII. This resulted in foreign holdings of Malaysian government bonds (MGS & GII) to decline by RM2.5bn to RM226.2bn as at end-September, equivalent to 23.1% of total outstanding. Foreign holdings of PDS inched higher to RM13.4bn as RM0.1bn was bought for the month. Meanwhile, foreign holdings of discount instruments increased by RM1.9bn for the month as foreign investors bought RM2.2bn of Malaysian Islamic Treasury Bills (MITB).

As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in September 2022 were lower by RM0.5bn, bringing total foreign ownership of MYR bonds to RM254.9bn or 13.7%. As at end-September 2022, foreign investors sold RM0.5bn of Malaysian bonds (Aug: +RM5.6bn; Jul: -RM3.5bn). Meanwhile, for the equity market, foreign investors returned as sellers with a net outflow of RM1.6bn in Sep (Aug: +RM2.0bn; Jul: +RM0.2bn). As a result, Malaysia recorded overall foreign portfolio outflow of RM2.1bn in September 2022 (Aug: +7.6bn; Jul: -RM3.3bn). Year to date, foreign portfolio inflows amounted to RM4.9bn as foreign investors have been net buyers of equity at RM6.6bn, but net sellers of bonds at RM1.7bn.

Source: BIMB Securities Research - 11 Oct 2022