Friday 29 Mar 2024
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KUALA LUMPUR (Aug 8): Foreigners remain net buyers of domestic bonds for the second month in July, recording RM5.7 billion compared to RM6.6 billion in June.

This lifted foreign holdings of government bonds (MGS & GII) to 22.2% as at end of July, the highest level in four months since March, UOB said in a note today.

"Foreign buying of equities was flat in July following RM100 million net purchases in June, albeit foreign holdings picked up to 23.2% in July," UOB senior economist Julia Goh added.

Meanwhile, emerging markets generally attracted foreign inflows in July.

"However, following the recent turn of events that saw US-China relations deteriorate to the point whereby reaching a deal in the near term is clearly more difficult, we think markets are likely to stay in risk-off mode for some time," Goh said.

She said Malaysia's debt and equity markets have not been spared with the ringgit weakening by 1.5% month-to-date to 4.1890 against the US dollar on Aug 7.

"That said, we expect stable foreign direct investment inflows and sustained current account surplus to remain supportive of the ringgit outlook. We maintain our US dollar/ringgit forecast at 4.18 by end-2019, and 4.22 by 1Q 2020," Goh said.

On rate cuts, Goh is not expecting Bank Negara Malaysia (BNM) to have another cut unless upcoming 2Q and 3Q 2019 gross domestic product (GDP) data disappoints alongside worsening consumer and business sentiment.

Malaysia's 2Q GDP and current account will be released on Aug 16. The next BNM monetary policy meeting will be on Sept 12.

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