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Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group assessed the recent figures from the Malaysian markets.

Key Quotes

“Foreign investors bought MYR0.9bn worth of Malaysian bonds in Sep (Aug: -MYR0.09bn) despite market caution ahead of FTSE Russell’s announcement. Malaysian equities saw sustained foreign selling albeit at a narrower pace of MYR0.6bn (Aug: -MYR2.6bn). In 3Q, foreigners bought MYR6.5bn worth of bonds but sold MYR3.2bn worth of equities”.

“Foreign reserves fell USD0.5bn to USD103.0bn as at end-Sep, which is sufficient to finance 7.6 months of retained imports and is 1.1 times short-term external debt. Foreign reserves remains supported by stable current account surplus and sustained foreign direct investments while foreign portfolio outflows ebb. Year-to-date, foreign reserves rose USD1.6bn in Jan-Sep”.

“FTSE Russell retains Malaysia in their bond index but still kept Malaysia on watch list until the next review in Mar 2020. As such, the announcement was neutral as markets refocus on US-China trade talks and next FOMC meeting on 29-30 Oct which could be a potential trigger for another risk-off episode. We reiterate our USD/MYR forecasts of 4.19 by end-2019 and 4.26 by mid-2020″.