Malaysia: Foreign Portfolio inflows rose to multi-month highs – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest portfolio results in Malaysia.

Key Takeaways

“Foreigners bought more MYR-denominated debt securities in Mar at MYR6.6bn (Feb: +MYR4.3bn), which helped to offset another month of net selling in equities (Mar: -MYR1.4bn, Feb: -MYR0.2bn). In 1Q23, foreigners piled up MYR11.4bn worth of Malaysian debt securities, the largest quarterly net purchases in two years with flows concentrating in Malaysian Government Securities (MGS, MYR9.7bn) and Government Investment Issues (GII, MYR4.6bn).”

“Bank Negara Malaysia (BNM)’s foreign reserves rose by USD1.2bn m/m to USD115.5bn as at end-Mar. This marks the highest FX reserves level since Mar 2022. It is sufficient to finance 5.1 months of imports of goods and services and is 1.1 time of total short-term external debt. BNM’s net short position in FX swaps narrowed for the first time in 15 months by USD0.3bn m/m to USD26.3bn (or 23.0% of FX reserves) as of Feb 2023.”

“Despite global banking sector turmoil easing and financial conditions stabilizing, we expect risk sentiment to remain cautious in the near term as markets continue to keep tabs on US data and market developments. Persistent repricing of Fed rate trajectory according to upcoming data points and news flows as well as China’s recovery momentum will continue to affect portfolio reallocation decision across regions including Malaysia.”