Foreign investors net buyers of bonds in December

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PETALING JAYA: Foreign investors turned net buyers of Malaysia’s debt securities in December last year, totalling RM6.1bil, after a month of net selling in November for RM3.6bil.

Total foreign debt holdings increased to RM256.6bil compared to November’s RM250.4bil, while its share to total outstanding debt rose to 14.8%, a seven-month high.

Kenanga Investment Bank Bhd, in a research note, said demand was likely driven by the return of global risk-on sentiment as Omicron fears began to subside, following reports that it was less severe than other Covid-19 variants.

“Furthermore, domestic bonds retained high yield differentials against many developed market bonds, keeping them attractive despite monetary policy tightening by major central banks.

“December’s inflow was driven by a sizeable net increase in holdings of Malaysian Government Securities and Government Investment Issues, which outweighed a softer rise in holdings of Malaysian Treasury Bills,” it added.

For the equity market, the research firm noted that foreign investors turned net sellers for the first time in five months, selling a total of RM1.1bil worth of shares compared to the RM200mil net buy in November.

It said demand for equities may have been hindered by lingering uncertainty over the Omicron variant and the United States Federal Reserve’s increasingly hawkish tilt, as it quickened the pace of its tapering process.

Kenanga said the capital market registered its largest inflow in four months amounting to RM5bil. — Bernama

It said the debt market remains at risk of outflows in the near term as the Fed may tighten monetary policy. — Bernama