Julia Goh, Senior Economist at UOB Group, and Economist Loke Siew Ting, assess the latest data from the Malaysian bond market.
Key Quotes
“Overall foreign portfolio inflows stood at MYR5.3bn in Apr (Mar: +MYR5.8bn) mainly into domestic bonds (+MYR6.4bn) against net selling of local equities (-MYR1.1bn). Bond inflows were in tandem with higher portfolio inflows into emerging markets last month.”
“Bank Negara Malaysia’s foreign reserves rose to a 7-year high of USD110.8bn as at End-Apr. Year-to-date, foreign reserves rose USD3.2bn. The latest reserves position is sufficient to finance 8.7 months of retained imports and is 1.3 times total short-term external debt.”
“The strength in foreign flows entering domestic bonds follows FTSE Russell’s decision to remove Malaysia from the Watch List and retain the country in its World Government Bond Index (WGBI). Domestic bond yields have retreated from the highs (in March) alongside US Treasury yields. Risk-off sentiment was also reinforced by the latest resurgence in COVID-19 infections, tighter containment measures, and Bank Negara Malaysia’s neutral monetary policy stance.”