Malaysia: Foreign Portfolio outflows surprised to the upside in October – UOB

Senior Economist at UOB Group Julia Goh and Economist Loke Siew Ting assess the recently published Foreign Portfolio readings in Malaysia.

Key Takeaways

Malaysia recorded a third straight month of foreign portfolio outflows worth MYR4.9bn in Oct (Sep: -MYR3.8bn, Aug: -MYR4.9bn). The outflows came through net foreign selling of Malaysian debt securities (Oct: -2.6bn) and equities (MYR2.3bn). Cumulative flows was still a net inflow of MYR16.1bn in Jan-Oct (vs. –MYR1.9bn in Jan-Oct 2022) despite sharp selloffs of MYR13.5bn in Aug-Oct which more than offset the MYR12.7bn of inflows in Jul.  

Larger foreign portfolio outflows in Oct exacerbated the MYR weakness, which fell 1.6% against the USD to USDMYR4.766 at end-Oct. Bank Negara Malaysia’s foreign reserves fell USD1.7bn m/m to USD108.5bn, bringing year-to-date decline to USD6.1bn. The latest reserves position is sufficient to finance 5.1 months of imports of goods & services and is 1.0 times the total short-term external debt. BNM’s net short position in FX swaps widened by USD1.2bn to USD24.1bn as at end-Sep.