Foreign investors remain net buyers of MGS, GII in Jan 2023: RAM Ratings

KUALA LUMPUR: Foreign investors remained as net buyers of the Malaysian Government Securities (MGS) and Government Investment Issues (GII) for the third consecutive month at RM2.7 billion in January.

RAM Rating Services Bhd (RAM Ratings) said the strong and sustained foreign buying occurred amidst softer United States (US) Federal Reserve’s (Fed) message on further rate hikes.

“However, the overall fund inflow into ringgit bonds, amounting to RM498.3 million, was moderated by outflows in shorter-term Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB),” it said in a statement today.

It noted that the healthy investor sentiment seemed to have reversed course in February, as strong US economic data fueled the Fed’s defensive mode, pushing back investors’ bets that the central bank will stop raising rates in the near term.

The bond selloff caused the 10-year US Treasury yield to surge to 3.82 per cent as of Feb 17 after touching 3.52 per cent at the end of January, the rating agency said.

“The benchmark 10-year MGS yield tracked this development with a quick climb back to 3.93 per cent as of Feb 17, after dropping 23.9 basis points month-on-month to 3.83 per cent as at end-January.

“With the Fed holding on to its hawkish stance, the next few weeks may see bond yields staying elevated as foreign investors remain on the sidelines, although local investor appetite should still be strong,” it added. – Bernama