Foreign investor demand for emerging market bonds waned in April

Published on 22 May 2023.

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The net foreign funds inflow slowed down in April to RM1.5 bil from RM6.6 bil in March. The reduction is attributed to the net outflow of MGS amounting to RM1.7 bil (March: RM4.4 bil inflow), a likely result of a lack of rollover options given two consecutive months of negative net MGS issuances (net issuance: -RM3.9 bil; net issuance in March: -RM9.9 bil). 

Malaysia was not the only country in the region to experience sluggish foreign fund inflows. Indonesia and Thailand also recorded smaller foreign net purchases of government bonds in April worth USD0.3 bil (March: USD0.9 bil) and USD6.8 mil (March: 0.6 bil), respectively.

MGS bond yields registered a broad-based decline in April, with steeper falls seen for longer-tenure bonds. The 10-year MGS yield was down 18.1 bps at 3.74% as of end-April, before rising to 3.79% as of 19 May. Meanwhile, shorter-tenure UST bond yields rose in May, whereas yields of medium- to long-tenure bonds fell slightly. The benchmark 10-year UST bond yield decreased 4 bps to 3.44% as of end-April before rising to 3.70% as of 19 May. Following the larger decline in MGS yields relative to UST securities, the 10-year MGS-UST yield spread narrowed to 9.2 bps on the same date (end-April: 29.8 bps).

 

Analytical contact Nur Nadia Mazlan (603) 3385 2513 nadia@ram.com.my

Media contact Hazli Halini Johari (603) 3385 2542 hazli@ram.com.my

 

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