It was recently reported that foreign investors bought net Malaysian bonds and debt securities in November 2023 amounting to RM5.4 billion for the first time in four months.
According to Kenanga Research, the increase in demand for Malaysian bonds is driven by the growing risk appetite among investors for emerging market assets due to the underperformance in the United States (US) macroeconomic indicators and less aggressive signals from the Federal Reserve (Fed).
He also said that Bank Negara Malaysia's (BNM) decision to maintain the Overnight Policy Rate (OPR) at 3.00% together with the narrower difference in Malaysian and US 10-year bond yields has increased the interest of foreign investors.
In addition, it was also stated that the inflow in November was driven by investment in Malaysian Government Securities (MGS), Government Investment Issues (GII) and Malaysian Treasury Bills (MTB).
Foreign investors went from being net sellers in October to being net buyers of Malaysian equities in November worth RM1.6 billion. It was its biggest figure in 15 months.
Bursa Malaysia saw large inflows from the utilities and healthcare sectors, outpacing consecutive outflows from the consumer products and services sector.
The shift can also be attributed mainly to the market's strong confidence that the Fed has reached the peak of its policy tightening cycle and is expected to head towards a policy easing phase next year.
