This article first appeared in The Edge Financial Daily on February 15, 2018

KUALA LUMPUR: Bank Negara Malaysia (BNM) said the country’s balance of payments fell into a deficit of RM13.1 billion in the fourth quarter of 2017 (4Q17), compared with a surplus of RM2.9 billion in 3Q17, amid higher outflows from the other investment account and higher errors and omissions recorded during the quarter. For the full year, the balance of payments was at a deficit of RM9.3 billion, versus a surplus of RM14.8 billion in 2016, according to the central bank’s latest quarterly bulletin released yesterday.It said its financial account saw an inflow of RM5 billion, supported by portfolio investment inflows by both residents and non-residents, foreign direct investment (FDI) and some liquidation of direct investment abroad (DIA) assets by Malaysian companies, but was partially offset by outflows from banks’ liquidity and treasury management operations.

The portfolio investment account registered a net inflow of RM11.7 billion amid a higher net inflow of non-resident portfolio investments of RM7.7 billion versus RM3.7 billion in 3Q17.

“Better-than-expected economic performance, higher corporate earnings and improvement in global oil prices provided support to investor sentiments in the domestic financial markets,” said BNM.

The direct investment account saw a lower inflow of RM5.1 billion compared with RM6.2 billion in 3Q17, amid a smaller net FDI inflow of RM2.8 billion, against 3Q17’s RM11.2 billion. This was mitigated by higher DIA by Malaysian companies which saw an inflow of RM2.3 billion compared to an outflow of RM5 billion in 3Q17.

Meanwhile, the other investment account saw a larger net outflow of RM10.9 billion, due to the placements of currency and deposits abroad by domestic financial institutions.