Malaysia: Foreigners increased their holdings of domestic assets – UOB

Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group assess the latest performance of FX reserves and foreign portfolio in Malaysia.

Key Takeaways

“Foreigners bought more MYR denominated debt securities in the first month of the year (Jan 2023: +MYR0.5bn, Dec 2022: -MYR0.9bn) mainly concentrated in government bonds. However, foreigners remained net sellers of equities for the 5th straight month albeit by a smaller quantum (Jan 2023: -MYR0.3bn, Dec 2022: -MYR1.4bn). Taken together, foreigners turned net buyers of Malaysian portfolio instruments by a marginal MYR0.2bn in Jan 2023 (Dec 2022: MYR2.2bn).”

“Foreign holdings of government bonds rose by MYR2.7bn to MYR228.9bn (or 22.1% of total outstanding). This was due to higher net buying of Malaysian Government Securities (MGS, +MYR1.3bn) and Government Investment Issues (GII, +MYR1.4bn). Foreigners sold more Malaysian Treasury bills, including Islamic T-bills (-MYR1.7bn) and conventional T-bills (-MYR0.5bn).”

“Bank Negara Malaysia (BNM)’s foreign reserves rose by USD0.5bn in Jan 2023 to USD115.2bn. This marks the highest FX reserves level since Mar 2022. It is sufficient to finance 5.3 months of imports of goods and services and is 1.0 time of the total short-term external debt. BNM’s net short position in FX swaps widened by USD0.4bn to USD26.4bn (or 23.0% of FX reserves) as at end-Dec 2022, its highest level on record.”