Malaysia Bond Flows - 9 November 2023

Third outflow of the year driven by risk-off sentiment due to Israel-Palestine war

Foreign investors extended their streak of divestment in Malaysia’s debt securities for the third straight month in October (-RM2.6b; Sep: -RM4.4b), driven by a sell-off in Malaysian Government Securities (MGS)

  • As a result, the total foreign debt holdings dropped to RM267.2b in October (Sep: RM269.7b), with its contribution to the total outstanding debt falling to a four-month low of 13.5% (Sep: 13.7%).
  • Increasing demand for safe-haven assets amid mounting geopolitical risks and concerns about a hawkish Fed has sustained its deterrence effect on high-quality emerging market bonds (e.g. MGS). Also, the persistent negative widening of the MY-US 10year government bond yield differential has further exacerbated the decline in foreign interest.

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