September inflows moderated on rising geopolitical risk and profit taking activity
Foreign investors continued its buying spree of Malaysia bonds for the third straight month in September, but the net inflows shrank to RM1.0b (Aug: RM9.0b) likely due to rising tensions in the Middle East and profit taking as ringgit hit its strongest level since March 2022.
- Total foreign debt holdings increased to RM289.1b in September (Aug: 288.1b), while the foreign share of total outstanding remained unchanged at 13.9% (Aug: 13.9%).
- September saw inflows driven by China’s stimulus, robust domestic trade growth, and a larger than expected US rate cut from the latest FOMC meeting. Demand focused on short-dated securities, as investors adjusted portfolios amid rising US market uncertainty alongside escalating geopolitical tensions in the Middle East. However, softer inflows emerged as solid US economic data—particularly a strong labour market and declining jobless claims— led to net selling of Malaysian Government Securities (MGS). The strengthening of the ringgit may have also encouraged profit-taking.
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