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Foreign investors turned net sellers of Malaysia’s debt securities in August as total foreign holdings fell by a marginal RM0.1 billion to RM188.2 billion, reversing the inflow seen in the previous two months, said Kenanga Research. NST file pix

KUALA LUMPUR: Foreign investors turned net sellers of Malaysia’s debt securities in August as total foreign holdings fell by a marginal RM0.1 billion to RM188.2 billion, reversing the inflow seen in the previous two months, said Kenanga Research.

However, the research firm said the share of total foreign holdings of Malaysia’s debt inched slightly higher to 12.7 per cent, as Malaysia’s total outstanding debt decreased at a faster pace of RM5.9 billion.

“August’s outflow was largely attributable to a net decrease in holdings of Malaysian Government Securities (MGS) and Malaysian Treasury Bills (MTB).

“Consequently, the foreign holdings share of total MGS and MTB tilted down to 37.7 per cent and 35.9 per cent respectively,” it said in a note.

These have more than offset increases in holdings of Malaysian Government Investment Issues (GII) by RM0.5 billion, Malaysian Islamic Treasure Bills by RM0.4 billion and Private Debt Securities by RM0.02 billion, the firm added.

Similarly, Kenanga Research said foreign investors remained as net sellers in the equity market in August, charting the largest outflow in 14 months of RM2.8 billion (Jul: RM0.1b).

Collectively, the capital market experienced its first net outflow of foreign funds in three months amid a weaker ringgit and growing tensions surrounding the US-China trade war.

Thus far, total capital outflow stood at RM4.1 billion versus RM28.1 billion in the same period of last year.

“We opine that the net-outflow observed this month may persist in the near term, as the US-China trade negotiation continues to sway between escalation and de-escalation of tension and as major economies experience faltering economic growth,” Kenanga Research said.

Nonetheless, the outflow would be less compared to the previous year, given that major central banks have pivoted towards monetary easing, with the Fed expected to embark on another round of rate cut in September, it

added.

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