PETALING JAYA: Foreigners bought RM3.9bil of Malaysian debt last month, bringing total foreign holdings of the country’s debt securities to RM213.6bil in November.
According to BIMB Securities economist Imran Nurginias Ibrahim, this marked the second consecutive month of increase in foreign holdings of Malaysian debt securities, with foreign holdings dropping to the year’s low in August, when it stood at RM197.8bil.
In October, foreigners bought a net RM7.8bil.
He said foreign ownership of Malaysian Government Securities (MGS) rose to RM159bil or 47.3% of total MGS outstanding as at end-November, up from 46.3% in October.
“We believe that MGS benefited from some repositioning flows from underweight to neutral on local currency bonds in tandem with the retracement of the US dollar/ringgit,” Imran said in a report.
The ringgit had strengthened by 1% against the greenback in November, but remains under pressure, with the US dollar strengthening by 21.62% year-to-Nov 30.
The announcement of several measures, including a pledge to buy Malaysian government bonds by Chinese premier Li Keqiang during the East Asia Summit late last month, helped improve sentiment on the ringgit and local bonds, which had been weighed down by foreign outflows with the plunge in crude oil prices.
Year-to-Nov 30, the total portfolio outflow stood at RM30.6bil, with the outflow from debt securities at RM12.3bil and the remainder from the foreign selling of equities.
Imran said investors would continue to keep a close watch on the mid-December meeting of the Federal Open Market Committee.
US Federal Reserve chairman Janet Yellen has hinted strongly of a hike in the benchmark federal funds rate, the first hike since 2006.
The rate now stands at between 0% and 0.25% and the market expects a 25-basis-point hike.
Imran believes the rate hike will not drive up market volatility significantly, as investors have priced it in.
Imran said the US dollar/ringgit cross-trade remained well-supported, trading in the range of 4.20 to 4.30. “While resistance remains at 4.28 levels, the ringgit is likely to advance against a softer US dollar, but expect gains to be modest amid extended weakness in the markets,” he added.
The resistance level sits at the 4.2716 to 4.2777 range, which would lead the ringgit to 4.24, before subsequently breaking lower to 4.2202.
Meanwhile, Imran said the country’s foreign reserves have stabilised amid mixed flows, with the reserves ranging from US$93bil to US$95bil since August.
As at end-November, reserves stood at US$94.6bil, a rise of US$600mil after increasing US$700mil in October.
Imran said the US$1.3bil total increase in reserves in October and November pales in comparison to the US$13bil decline between June and September.
He said the deterioration in reserves began to show a slowing rate of decline in September.
“From the current level, reserves should continue to increase from running current account surpluses and Bank Negara taking a light-handed approach in foreign exchange markets,” Imran said.
