Malaysia: Foreign Portfolio went negative in August – UOB

Pablo Piovano FXStreet

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest monthly foreign portfolio figures in Malaysia.

Key Takeaways

Malaysia recorded foreign portfolio outflows for the first time this year in Aug, totaling MYR4.9bn (Jul: +MYR12.7bn). This was purely attributed to the largest foreign selling of Malaysian debt securities in 10 months at MYR5.0bn (Jul: +MYR11.3bn) as Malaysia’s equity market continued to draw non-resident purchases for the second straight month at MYR0.1bn (Jul: +MYR1.4bn).

Bank Negara Malaysia (BNM)’s foreign reserves reduced by USD0.4bn m/m to USD112.5bn as at end-Aug (end-Jul: +USD1.5bn m/m to USD112.9bn). The latest reserves position is sufficient to finance 5.2 months of imports of goods & services and is 1.0 times the total short-term external debt. BNM’s net short position in FX swaps widened for a third consecutive month by USD0.2bn m/m to USD24.3bn as at end-Jul (end-Jun: +USD0.4bn m/m to USD24.1bn).

Renewed uncertainties surrounding China’s economic recovery pace, global crude oil and essential food supply, policy rate trajectory, as well as geopolitical tensions have heightened volatility in the global financial and capital markets. Malaysia was not spared from these turbulences, with investors expected to take a more cautious stance and remain selective in positioning in the near term. Country-specific factors particularly government policy and medium-term plans will then play a key role in investors’ asset allocation considerations.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD gathers strength to near 1.3300; NFP data loom

The GBP/USD pair gains traction to near 1.3290 during the Asian trading hours on Thursday. The British Pound strengthens against the US Dollar as the UK's likely next Prime Minister, Andy Burnham, has eased market concerns by pledging strict fiscal discipline. The US Nonfarm Payrolls data for June will take center stage later on Thursday.

EUR/USD approaches 1.1400 as bearish flag remains in play

The EUR/USD pair ticks higher during the Asian session though it lacks bullish conviction as traders keenly await the release of the crucial US Nonfarm Payrolls report. Spot prices currently trade around the 1.1385 area and remain close to the weekly low, touched on Wednesday.

Gold trades with positive bias; Fed hike bets cap gains ahead of US NFP

Gold attracts fresh buyers during the Asian session, following the previous day's volatile price swings and a late pullback from an over one-week high. The US Dollar edges lower on the back of Wednesday's softer-than-expected US macro data and turns out to be a key factor supporting the commodity for the second consecutive day.

Ripple and Stellar build on recovery as traders turn cautiously bullish

Ripple and Stellar extend recovery as improving market sentiment supports a rebound. XRP trades above $1.05 while XLM climbs past $0.199. Traders should remain cautious, as mixed on-chain and derivatives data indicate a modest bullish bias, and further upside may depend on sustained buying momentum.

A preview of NFP

The number is of much greater importance than usual as the Fed moves away from a forecasting framework and towards a current-data/rebuilding-credibility framework. While I have been pooh-poohing Warsh’s hawkish opener, I am also open to the idea that if he is serious about rebuilding credibility, he can find enough hawkish votes, and if June NFP is another hot one—July FOMC could be in play.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.