Malaysia: Foreign demand for bonds remains firm – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the latest portfolio flows into Malaysian assets.

Key Quotes

“Foreign funds remained net buyers of Malaysian bonds for the fourth straight month with net purchases of MYR3.0bn in Aug (Jul: MYR7.1bn). Portfolio flows continue to re-enter Emerging Markets amid massive Fed easing and stabilising sentiment. Foreigners were net sellers of Malaysian equities although selling abated to MYR1.5bn in Aug (Jul: -MYR2.6bn).”

“Bank Negara Malaysia’s (BNM) foreign reserves rose USD0.2bn m/m to USD104.4bn as of endAug. The latest foreign reserves position is sufficient to finance 8.6 months of retained imports and is 1.1 times short-term external debt.”

“USD/MYR pushed lower to 4.14/15 in Aug amid further USD weakness. MYR is expected to continue its modest gains alongside that of stable crude oil prices above USD 40 / bbl. As such, we have revised our USD/MYR point forecasts to 4.15 for 3Q20, 4.13 for 4Q20 and 4.10 for 1Q21 and 2Q21 (from 4.20 for 3Q20, 4.18 for 4Q20 and 4.15 for 1Q21 and 2Q21 previously).”