KUALA LUMPUR (Aug 3): Malaysian bonds recorded the highest monthly net foreign outflow of RM4.1 billion in June 2022 amid global risk-off sentiment as investors weighed the impact of US interest rate hikes to fight inflation and strength of the US dollar, according to analysts.

The net foreign outflow of RM4.1 billion in June completely offset the cumulative net foreign inflow of RM911 million recorded from January to May 2022, according to Malaysian Rating Corp Bhd (MARC).

"As such, the cumulative foreign flows currently stand in the negative territory at RM3.2 billion, last seen in June 2020," MARC wrote in a note on Tuesday (Aug 2).

Maybank Investment Bank Bhd analyst Wong Chew Hann said in a note on Wednesday (Aug 3) that foreign funds pulled out RM4.1 billion from ringgit-denominated bonds in June compared to the estimated RM500 milllion foreign money inflow in May.

This trimmed total foreign holdings to RM253.3 billion as at end-June, Wong said.

The June outflows were primarily from Government Investment Issues (GII) of RM3.4 billion and Malaysian Government Securities (MGS) of RM900 million.

"The share of foreign holdings fell to 9.2% for GII (May: 10.1%), 36.5% for MGS (May: 37.4%) and 23.9% for MGS+GII (May: 24.7%)," Wong said.

"Including the RM1.3 billion of foreign net sell in [Malaysian] equities in June, total portfolio flow was –RM5.4 billion (May: +RM0.6 billion). For [January-June] 2022, total portfolio flow was a smaller +RM2.9 billion (2021: +RM30.4 billion)," Wong added.