Malaysia: Portfolio inflows resumed the upside in August – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the recent trends in the foreign portfolio flows in Malaysia.

Key Quotes

“Malaysia’s overall foreign portfolio flows rose by MYR7.7bn in Aug, which more than offset declines in two preceding months (Jul: -MYR5.0bn, Jun: -MYR1.7bn). Foreigners turned net buyers of domestic debt securities (+MYR6.6bn) and equities (+MYR1.1bn). This marked the first month of net buying of equities since Jun 2019.”

“Bank Negara Malaysia’s (BNM) foreign reserves rose by USD5.2bn m/m to USD116.3bn as at end-Aug, marking the highest level of reserves in nearly 7 years. The higher reserves reflect an additional allocation of Special Drawing Rights (SDRs) to Malaysia by the IMF. The latest reserves position is sufficient to finance 8.3 months of retained imports and is 1.3 times total short-term external debt.”

“Higher foreign flows into Malaysia last month follows abating domestic political risk after the appointment of new Prime Minister, and further progression in vaccination rates that paves the way for further economic recovery.”