Julia Goh, Senior Economist at UOB Group, and Economist Loke Siew Ting assess the latest foreign portfolio figures in Malaysia.
“Malaysia’s overall foreign portfolio flows turned negative for the first time in nine months to MYR1.7bn in Jun (May: +MYR1.7bn) after overseas investors sold MYR0.5bn in Malaysian debt securities for the first time in 14 months (May: +MYR1.9bn). Substantial net selling of Bank Negara Malaysia (BNM) Bills and Treasury Bills during the month were main contributors to the debt outflows, while foreign investors continued to shy away from Malaysian equities (Jun: - MYR1.2bn; May: -MYR0.2bn).”
“Bank Negara Malaysia’s foreign reserves went up for the third straight month by USD0.2bn m/m to a 6½-year high of USD111.1bn as at end-Jun (end-May: +USD0.2bn m/m to USD110.9bn).”
“A confluence factors of elevated inflationary pressure worldwide, Fed’s hawkish shift that has raised potential taper-tantrum and earlier Fed rate hike risks, and rising global debt burden are expected to tame non-resident portfolio flows into emerging markets in the near term. This alongside some negativities at home (i.e. high COVID-19 cases with more infectious strain and fluid political situations) may continue to affect the MYR’s performance.”
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