Foreign investors ramped up purchases of Malaysian assets last month in their hunt for carry returns amid bets global central banks are near the end of their tightening cycles.
They bought a total of about US$2 billion of Malaysia’s stocks and bonds, according to data compiled by Bloomberg, the most since May 2017. More than 80 per cent of the total inflows went into the nation’s corporate and sovereign debt.
Bond flows were likely concentrated in short-dated notes amid still attractive US dollar-hedged yields and a conducive environment for carry, said Winson Phoon, head of fixed-income research Maybank Securities Pte in Singapore. “Positioning at the short end with little duration risk, forex hedging and Federal Reserve rate nearing a peak has its appeal to churn carry and a better proposition from risk reward angle.”
Stock prices displayed inside the trading gallery of the RHB Investment Bank headquarters in Kuala Lumpur. Photo: Bloomberg
The inflows come after a tough first half of the year, as slow market-friendly reforms and sluggish demand from China dragged the nation’s stocks and currency to the bottom of the region’s performance rankings. The inflows have helped turn that around, with the ringgit now the best performer over the past month while stocks have climbed more than 5 per cent over the same period.
