Foreign inflow persisted in January despite rising global yields

Published on 28 Feb 2022.

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Foreign buying of Malaysian bonds (net total inflows: RM3.5 bil) continued into January despite a surge in global yields following the US Federal Reserve’s impending interest rate hike.  Net foreign purchases of MGS and GII amounted to RM4.3 bil in January (Dec 2021: RM6.3 bil). 

UST yields rose broadly across all tenures, with the 10-year yield jumping 27.0 bps m-o-m to 1.79% as of end-January and 1.97% as of 25 February. This led to thinner 10-year MGS-UST yield spread of circa 170 bps in February (average 4Q 2021: 206 bps).

The recent Russia-Ukraine conflict represents a key risk to the financial markets in emerging economies, which if prolonged, could dampen foreign investor demand in this region.

 

Analytical contact Woon Khai Jhek, CFA (603) 3385 2512 khaijhek@ram.com.my

Media contact Sakinah Ariffin (603) 3385 2505 sakinah@ram.com.my

 

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Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Registration of Credit Rating Agencies, 2011. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains. 

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