Malaysia’s 2022 Foreign Fund Flow Ends On A Soft Note

Another month of outflow capped the year 2022 with –MYR0.9b in December (Nov: -MYR1b), mainly driven by discount instruments. In fact, foreign funds were bought into MGS and GII. Full-year cumulative outflow was – MYR9.8b (2021: +MYR33.6b) amid rate tightening led by DM. Total foreign holdings fell to MYR246.8b at end-2022 (2021: MYR256.6b). Regional debt Indonesia and Thailand also had net gains. Malaysia’s external reserves rose to USD114.6b in end-December (+USD4.9b MoM), the highest since Mar 2022.

Malaysia Foreign Flows
Total debt flows -MYR0.9b. Foreign funds pulled –MYR0.9b from Ringgit bonds in December (Nov: -MYR1b). For full-year 2022, the cumulative foreign flow was a net loss of –MYR9.8b (2021: +MYR33.6b) amid rate tightening led by developed markets in the backdrop. Total foreign holdings decreased to MYR246.8b at end-2022 (2021: MYR256.6b).

By debt instrument, foreign funds net bought MYR2.2b and MYR0.5b of MGS and GII respectively, but this was offset by a large outflow from discount instruments (-MYR3.5b) and a small loss of –MYR0.1b from PDS. Foreign shares edged higher to 34.6% for MGS (Nov: 34.4%) and 22.4% for MGS+GII (Nov: 22.3%).

Outflows from discount instruments were probably due to the run-down of outstanding Treasury bills into the year’s end and some of which might have been switched into MGS. Regional debt by Indonesia and Thailand also reported net gains amid China reopening optimism as well as supported EM Asia FX and local rates sentiment. Including foreign outflow of –MYR1.5b from domestic equities (Nov: -MYR0.3b), the total portfolio flows was a net loss of –MYR2.4b in December. Cumulative total portfolio flows for the full year 2022 amounted to –MYR5.6b net loss vs +MYR30.4b net gain in 2021.

BNM’s FX forward position, which is released with a one-month lag, widened to –USD26b net short in November (Oct: USD24.4b), but the pace has slowed to –USD1.6b MoM (Oct: -USD1.9b, Sep: -USD7.4b). Ringgit kept its gains from November and even firmed up a tad in December with USDMYR pair down c.1% to 4.405 at end-December (Nov: 4.446). Malaysia’s external reserves surged to USD114.6b at end-December (+USD4.9b MoM), the highest since Mar 2022

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