‘MARKET CAN SUPPORT BOND SELLING’
This will be helped by stable macroeconomic fundamentals
THE local market has the ability to support the sale of Malaysian sovereign bonds by foreigners, said AmBank Research. This will be helped by stable macroeconomic fundamentals, with the economy poised to grow around 4.5 per cent this year and 4.8 per cent next year.
Still, AmBank Research expects some upward pressure on the Malaysian sovereign bond yields to remain.
Based on its estimates, for every RM10 billion drop in foreign holdings of Malaysian Government Securities (MGS), the 10year MGS yield is expected to increase by six basis points (bps), meaning the yields should have spiked sharply from the recent sell-down to around 37.6bps but rose to 34bps instead.
A record RM26.2 billion in Malaysian sovereign bonds were sold by foreigners in March, it said. This lowered their exposure to 38.5 per cent from 44.7 per cent in February and a peak of 51.9 per cent in October last year. AmBank Research said global funds had withdrawn RM62.7 billion from Malaysian sovereign bonds from last November till March.
“It is the longest stretch of outflows since 2014. It followed measures introduced to address the offshore non-deliverable forward market in a move to stabilise the volatility, which were effective,” it added. Withdrawal from sovereign bonds from Nov-March