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KUALA LUMPUR, Feb 24 — Net foreign purchases of ringgit bonds sustained a healthy RM3.7 billion in January 2021 compared with RM3.6 billion recorded in December 2020, extending the inflow for the ninth consecutive month.
In a statement today, RAM Rating Services Bhd (RAM Ratings) said the sustained foreign demand in the previous quarter was underpinned by the purchase of Malaysian Government Securities (MGS) and Government Investment Issue (GII) among non-sticky investors, notably foreign banks which raised their holdings by RM6.6 billion quarter-on-quarter.
“On the other hand, sticky investors, including foreign central banks/government, pension funds and insurers, steadily accumulated MGS and GII in the fourth quarter (Q4) of 2020, advancing a healthy RM4.1 billion from RM7.1 billion in Q3 2020,” it said.
Meanwhile, RAM Ratings said bond yields in Asean markets generally trended upwards in January, tracking the upswing in US Treasury (UST) yields.
The agency said this was triggered by increased reflation trade amid the anticipated economic recovery of the United States economy.
“The 10-year UST yield came in at 1.1 per cent as at end-January 2021 — the first time it breached the 1.0 per cent level since February 2020 — amid persistent selling pressure,” RAM Ratings said.
The benchmark 10-year MGS yield rose 8.6 basis points (bps) month-on-month (m-o-m) to 2.68 per cent.
“Upward pressure on the shorter end of the yield curve was, however, less pronounced, with the one-year MGS yield inching up 2.1 bps to 1.75 per cent.
“Meanwhile, the 10-year yields of Thailand’s and Indonesia’s government bonds increased to a respective 5.5 bps and 16 bps m-o-m in January,” it added. — Bernama