Fixed Income Foreign Flows_20150512

GII – A Leap of Faith

·         GII netted in MYR4.8b of foreign flows in April with total foreign holdings rising to MYR10.7b which is a historical high.

·         MGS reported foreign inflows of MYR6.1b vs discount instrument's outflows of MYR6.2b. While we continue to see real-money demand on MGS, the amount of inflow to MGS is still magnified by the redirection of flows from matured BNM notes, in our view. MGS's foreign share of ownership stood at 47% and we believe redirected flows may have contributed 3 to 5 percentage points since the discontinuation of BNM notes new issue.

·         Regional inflow trend remain intact, with a total inflow of USD2b in April for Malaysia's MGS and Indonesia combined, while Korea and Thailand's data is pending.