Foreign inflow into govt bonds at RM9b in May, says BNM

Malaysia

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

The central bank said on Friday 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 4, 13 and 17 basis points respectively,” it said.

BNM 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 groiss 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%. 

BNM 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 short-term external debt creates a claim on reserves given the availability of external assets and export earnings of borrowers,” it said.

BNM also pointed there was sufficient liquidity in the banking system which supported the banks' financing activities. 

“Aggregate surplus liquidity placed with BNM 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.