Malaysia's net foreign bond holdings rebound to RM5.6bil in August

Malaysia's net foreign bond holdings rebound to RM5.6bil in August

KUALA LUMPUR: Malaysia’s total net foreign bond holdings rebounded to RM5.6 billion in August 2022 after two consecutive months of net outflows, as foreign appetite for emerging market bonds made a comeback in the month, says RAM Rating Services Bhd (RAM Ratings).

The credit rating agency said in August 2022, foreign investors purchased RM3.6 billion worth of Malaysian Government Securities (MGS) and Government Investment Issues (GII), RM1.9 billion Malaysian Treasury Bills and Malaysian Islamic Treasury Bills, as well as RM69.1 million of corporate bonds.

“With recent strong United States (US) economic data easing fears of a hard landing, global risk-off sentiments have eased among investors,” it said in a statement today.

According to RAM Ratings, the 10-year MGS yield increased the most, climbing 8.6 basis points (bps) month-on-month (m-o-m) to 3.98 per cent.

“The yield differential between the 10-year MGS and the 10-year US Treasury (UST) securities continued to narrow, averaging 106 bps in August 2022 versus 116 bps in July 2022 as investors expect the US Federal Reserve’s hawkish rate hikes to continue for the rest of the year,” it said.

It added that the UST yields rose by a larger 48.0 bps m-o-m to 3.42 per cent in August 2022, and the narrowing trend persisted into September, with the yield spread averaging around 74.4 bps as of Sept 13, 2022. – Bernama