Friday, April 14, 2017

Foreign Investors Still Cutting Fixed Income Investments

Economic Research
14 April 2017

Economic Update

Recently-released data on foreign holdings in Malaysia’s fixed income securities show a sharp decline of MYR26.2bn to MYR178.2bn, as at end-March. This was the fifth straight month of selling down, as foreign investors continued to adjust to the changing economic environment. Going forward, we believe Malaysia may continue to see some foreign selling in fixed income investments on account of:

1.   A further rate hike in the US;
2.   Sizeable maturity of Malaysian government securities (MGS) in 2H17.

The sell-down in the fixed income market, has taken a significant toll on the MYR. The ringgit depreciated by 7.6% in the final three months of 2016. However, it has stabilized, following measures undertaken by the Central Bank to deepen the on-shore foreign exchange market.

Economist:  Vincent Loo Yeong Hong  | +603 9280 2172
Economist:  Aris Nazman Maslan  | +603 9280 2184

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