Malaysia’s foreign portfolio outflow widens to RM5.1b in January

KUALA LUMPUR: Malaysia’s foreign portfolio outflow widened in January, as holders net sold RM5.1 billion worth of debt securities, standing at RM1.9 billion in December 2023, UOB Global Economics & Market research says.

It adds that January saw the largest net selling of bonds in 15 months. “This is more than offset their net buying of Malaysian equities for a third straight month,” it says in a note.

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Foreign Portfolio

External buyers net bought RM0.7 billion in Malaysian equities. Bank Negara Malaysia’s foreign reserves increased to US$114.8 billion in January, sufficient for 5.4 months of imports and covering 1.0 times the total short-term external debt.

The central bank’s net short position in FX swaps narrowed to US$23.6 billion in December 2023. The US economic strength and Fed Chair Jerome Powell’s affirmation deter a rate cut at the March FOMC meeting.

Market repricing of rate cuts led to volatility, with 10-year treasury yields rising to 4.12% and the dollar index to 104. UOB predicts Fed rate cuts in June, Q3, and Q4, foreseeing US dollar weakness.