Right moves: FT Russell cited Bank Negara’s initiatives in improving secondary market bond liquidity and enhancing the foreign exchange market structure and liquidity as catalysts for its decision to retain Malaysia in the WGBI.
CHINA’S inclusion in the FTSE World Government Bond Index (WGBI) may pose a competition to Malaysia’s sovereign debt market. However, the risk of capital outflow is expected to be manageable, as China’s bonds will only be added into the index through a phased inclusion over a period of 36 months from October this year.
The long phase-in period for China’s inclusion, and the removal of Malaysia from the watchlist for exclusion from WGBI, have been positive news for the Malaysian Government Securities (MGS) market.
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