Malaysia Bond Flows - 9 January 2024

Foreign portfolio funds turned net sellers of RM2.1b in domestic bonds in December

Foreign investors turned net sellers of Malaysia’s government bonds in December (-RM2.1b; Nov: RM5.4b), driven by a sell-off in long-term securities

• As a result, the total foreign debt holdings decreased to RM270.4b in December (Nov: RM272.6b), with its share to the total outstanding debt falling to a twomonth low of 13.6% (Nov: 13.8%).
• The cautious wait-and-see approach adopted by investors, coupled with Moody's downgrade of China's credit outlook, may have tempered demand for risk assets in December. However, outflows could have been slightly offset by the narrowing of the MY-US 10year bond yield differential and the Fed's dovish pivot. Notably, in 2023, cumulative foreign funds turned into a net inflow of RM21.3b (2022: -RM5.5b), primarily driven by net buying of Malaysian debt securities (RM23.7b), slightly offset by net sell-off of equities (RM2.4b).