Foreign holdings of 10-year MGS in Jan steady
KUALA LUMPUR: Foreign holdings of Malaysian bills and bonds may have improved last month from the RM2.2 billion drop posted in December, said Affin Hwang Capital.
This was due to steady foreign interest in Malaysian Government Securities (MGS) and Government Investment Issue, said the firm in its review of the country’s foreign reserves.
“Malaysia’s bond market saw demand for the 10-year MGS in January remain steady with the yield unchanged at 4.07 as of end-January 2019, similar to endDecember 2018, ” it added.
Affin Hwang said this was supported by the United States Federal Reserve’s reluctance to raise interest rates.
It is also positive on Malaysia’s economy, maintaining a trade surplus forecast of around RM100 billion this year.
The trade balance widened to RM120.3 billion last year from RM98.5 billion in 2017, making it the country’s biggest trade surplus since 2012.
Meanwhile, foreign reserves have remained above US$100 billion (RM4.07 billion) since August 2017, thanks to healthy trade balance and current account surplus.
Bank Negara Malaysia’s foreign reserves rose RM1.9 billion to RM422.3 billion in the second half of last month, compared with RM420.4 billion as at January 15.
The current reserves level is enough to cover 7.4 months of retained imports versus 7.3 months as at middle of last month while the reserve coverage of short-term external debt was unchanged at 1.0 times.
“We expect the country’s reserves to be about US$100US$105 billion by year-end compared with US$101.4 billion as at end 2018,” said Affin Hwang.
It said there was a net inflow of RM1 billion in the equity market last month compared with a net outflow of RM1 billion last December.