Foreign fund inflows extend into April, with record demand for corporate bonds

Published on 21 May 2026.

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Foreign investors remained net buyers of Malaysian bonds in April, albeit at a slower pace of RM3.8 bil (March: RM6.1 bil), with a greater concentration in corporate bonds (+RM3.7 bil).

Corporate bonds attracted RM3.7 bil in net foreign inflows – the largest monthly inflow on record since 1999 – extending the strong momentum seen in March (RM2.8 bil). In contrast, foreign holdings of government bonds (MGS and GII) were largely flat, with only RM48.8 mil in inflows in April (March: Net inflow of RM3.8 bil). This signalled greater and more sustained foreign investor interest in Malaysian corporate bonds over the past two months.

The US Federal Reserve maintained its policy rate at the April 2026 Federal Open Market Committee meeting – marking a third consecutive pause since the last rate cut in December 2025 – as rising inflation and a resilient labour market continue to support a cautious stance. Market expectations have shifted firmly towards rates remaining unchanged at the June and July meetings, with probabilities rising to about 99% and 95%, respectively, as of mid-May, according to the CME FedWatch Tool.

Amid this “higher-for-longer” outlook, the 10-year US Treasury yield rose to 4.40% as at end-April (end-March: 4.30%) while the 10-year MGS yield eased to 3.61% (end-March: 3.66%), staying supported by stable domestic liquidity conditions and continued demand from local institutional investors. As a result, the UST-MGS spread increased to 79.0 bps at end-April (end-March: 64.0 bps). This trend continued heading into May and reached 104.1 bps as at 19 May, the widest since July 2025. This could dampen the appeal of local government securities, with foreign holdings already declining to RM281.7 bil as at 14 May (30 April: RM283.5 bil).

 

Analytical contact Woon Khai Jhek, CFA  (603) 2708 8286 khaijhek@ram.com.my		Media contact Sakinah Arifin (603) 2708 8212 sakinah@ram.com.my
Nur Rasyidah Abd Karim (603) 2708 8208 rasyidah@ram.com.my

 

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