Foreign entry into the Malaysian debt market appears to have lost momentum in May, according to Julia Goh, senior economist at UOB Group, and economist Loke Siew Ting.
Key quotes
“Malaysia recorded an eighth consecutive month of inflows of foreign portfolios totaling MYR 1.7 billion in May (April: + MYR 5.2 billion). Although foreigners remained net buyers of domestic bonds, the pace of inflows slowed to MYR 1.9 billion (vs. April: + MYR 6.4 billion), marking the lowest inflows since September 2020 Foreigners remained net sellers of MYR 0.2 billion domestic stocks (vs. April: MYR -1.1 billion). “
“Bank Negara Malaysia’s foreign exchange reserves have increased by US $ 0.1 billion m / m or US $ 3.3 billion since the start of the year to reach US $ 110.9 billion at the end of the year. May, the highest level since December 2014. The last reserve position is sufficient to finance 8.4 months of retained imports and is 1.1 times the total short-term external debt.
“The slowdown in foreign flows into Malaysian capital markets in May was in line with the trend of easing portfolio flows from non-residents to emerging markets. Key concerns include a mixed and slower recovery among emerging market economies given a resurgence in infections, a slow pace of vaccinations, higher inflationary pressures, a lower fiscal outlook and debt burden, and a risk of tapertantrum. “