• Foreign holdings of MYR debts securities declined to RM274.2bn

• Foreigners sold RM5.2bn of MGS and RM0.6bn of GII

• Foreign investors remained net buyers in equity market

• Total portfolio outflows of RM4.9bn for equities and debt securities combined

• Yield remained resilient despite significant sell off in UST

Malaysia’s foreign portfolio flows reversed course and turned negative with foreign investors pulling out RM5.0bn from Malaysian capital market in August for the first time this year, bringing the accumulated total foreign holdings of Malaysia debt securities to RM274.2bn at end-August from record high of RM279.2bn in July.

Looking into details, foreign investors pared down their holdings of MGS by RM5.2bn (Jul: +RM7.6bn; Jun: +RM1.6bn) to RM201.8bn or 35.8% of total MGS outstanding. Overseas investors also sold their holdings of GII by RM0.6bn (Jul: +RM1.7bn; Jun: +RM3.7bn) to RM50.4bn or 9.8% of total GII outstanding as at end-August. This resulted in foreign holdings of Malaysian government bonds (MGS & GII) to decline by RM5.8bn to RM252.2bn as at end-August, which was equivalent to 23.4% of total outstanding (Jul: RM258.0bn or 24.2%). Foreign holdings of discount instruments increased by RM0.7bn for the month as foreign investors bought Malaysian Treasury Bills (+RM0.9bn). Meanwhile, foreign holdings of PDS remained stable as only RM0.1bn was bought for the month. As a result, in combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in August 2023 were lower by RM5.0bn, bringing total foreign ownership of MYR bonds to RM274.2bn or 13.8%.

As at end-Aug 2023, foreign investors sold RM5.0bn of Malaysian bonds (Jul: +RM11.3bn; Jun: +RM5.2bn). Meanwhile, foreign investors remained net buyers on Bursa Malaysia amid with a smaller amount of inflow of RM0.1bn (Jul: +1.4bn; Jun: - RM1.3bn). As a result, for the first time in 2023, Malaysia recorded overall foreign portfolio outflow of RM4.9bn in August (Jul: +12.7bn; Jun: +RM3.8bn). Cumulatively, YTD, foreign portfolio inflows amounted to RM24.8bn (8M22: +RM7.0bn), purely lifted by inflows into debt securities (8M23: +RM27.4bn, 8M22: -RM1.2bn). Foreign selling of Malaysian equities accumulated to RM2.6bn in 8M23 (8M22: +RM8.2bn).

Source: BIMB Securities Research - 11 Sept 2023