Foreign Investors Bought Local Bonds For 3 Months With RM5.5 Billion In May
Foreign investors net bought local bonds for third consecutive month in May (RM5.5b; Apr:RM0.6b) Consequently, total foreign debt holdings rose to RM271.9b in May, with its share of total outstanding debt increasing to 13.2% (Apr: 13.0%), a
five-month high.
Kenanga said a combination of robust Malaysian macroeconomic data and weakness in key US indicators has drawn
investors to redirect their funds into the Malaysian debt market in May. Notably, on May 7 and 8, investors net bought RM2.3b in bonds following the release of weak US jobs report and ISM services figure. To add, on May 17, lower-than-expected US inflation figures and weak retail sales led to single-day inflows of RM0.9b. Also contributing to these inflows were strong domestic IPI data, alongside waning US consumer sentiment.
May’s substantial inflows were driven by funds flowing into Malaysian Government Securities (MGS), Government Investment Issues (GII) and Malaysian Islamic Treasury Bills (MITB)
At the same time ,foreign investors also turned net buyers of Bursa Malaysia in May reversing April’s outflows − Notably, on the first week of May, a significant foreign inflow of RM1.1b was recorded, mainly propelled by investments in the utilities sector. While inflows persisted for most of the month, buoyed by domestic economic optimism and positive movement in US stocks, foreign buying activity on the local bourse reversed in the final week of May, resulting in a substantial outflow of RM1.2b.
The capital market recorded net foreign inflows of RM7.0b, its highest level since July 2023.
The potential for ringgit appreciation from its current level further enhances investor returns. With BNM maintaining the overnight policy rate at 3.00% potentially until the end of 2025, and coupled with the government’s fiscal consolidation efforts, the domestic bond
market is well-positioned to attract significant inflows.
