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Julia Goh, Senior Economist at UOB Group and Economist Loke Siew Ting review the latest figures from the Malaysian bond market.

Key Quotes

“Malaysia continued to record higher foreign portfolio inflows at the start of 2021 mainly into domestic bonds. Overall net foreign inflows totalled MYR2.8bn in Jan (Dec: +MYR3.0bn) with bond inflows of MYR3.7bn (Dec: +MYR3.6bn) while equities saw net outflow of MYR0.8bn (Dec: -MYR0.6bn). This mirrored the trend of higher portfolio flows entering emerging market bonds.”

“Bank Negara Malaysia’s foreign reserves edged up for the third straight month by USD1.0bn m/m to a 33-month high of USD108.6bn as at end-Jan (end-Dec: +MYR2.3bn m/m to USD107.6bn). The latest reserves position is sufficient to finance 8.6 months of retained imports and is 1.2 times total short-term external debt.”

“Despite domestic challenges, we think Malaysia’s government bonds remain attractive as capital flows into emerging markets remain strong given low global interest rates and high market liquidity that boosts positive carry-trades. To watch are release of Malaysia’s 4Q and 2020 GDP (11 Feb), BNM monetary policy meeting (4 Mar), release of BNM Annual Report 2020 (end-Mar), and FTSE Russell’s March WGBI review. Malaysia will start the first phase of its vaccine program by end-Feb (for front liners), second phase in Apr (for high-risk groups), and the third phase in May (for aged 18 and above).”