RM9bil from non-residents flow into Govt bonds in May

KUALA LUMPUR: Non-resident inflows into the Government bond market amounted to RM9bil in May, which was the second consecutive month of inflows, according to Bank Negara.

The central bank said in a statement yesterday the inflows reflected the positive developments arising from measures to develop the domestic financial market.

“As a result, the three-year, five-year and 10-year MGS (Malaysian Government Securities) yields declined by four, 13 and 17 basis points respectively,” it said.

The central bank pointed out the equity market also continued to receive non-resident inflows in May totalling RM2bil.

The inflows were due to improved investor sentiment due to the stronger-than-expected grosss domsetic product (GDP) growth in the first quarter of 2017 and improved ringgit outlook.

However, a sell-off towards the end of the month, saw the Bursa Malaysia’s benchmark index, the 30-stock FBM KLCI declining marginally by 0.1%.

The bank also noted that its international reserves had increased steadily in 2017. As at June 15, 2017, the international reserves are sufficient to finance 8.2 months of retained imports, significantly higher than the three-month international threshold, and was 1.1 times the short-term external debt.

“It is important to note that not all shortterm external debt creates a claim on reserves given the availability of external assets and export earnings of borrowers,” it said.

The central bank also pointed there was sufficient liquidity in the banking system which supported the banks’ financing activities.

“Aggregate surplus liquidity placed with Bank Negara stands at RM179.2bil.

“All banks also maintained Liquidity Coverage Ratios above the regulatory requirement1 to meet unexpected cash outflows or adverse liquidity shocks,” it said.

Meanwhile, headline inflation declined to 3.9% (April: 4.4%) driven mainly by lower fuel prices during the month (prices of RON95 petrol averaged lower at RM2.09 per litre in May compared to RM2.21 per litre in April).

With global oil prices trending lower in June, domestic fuel prices also averaged lower in June, the central bank noted.