Foreign investors favour Malaysia bonds but net sellers of local stocks
KUALA LUMPUR: Foreign investors remain supportive of Malaysia’s debt market, recording RM900 million of net inflows into Malaysian bonds last week, said Kenanga Research.
Foreign investors turned net sellers of South Korean bonds in August for the first time in nearly three and a half years, according to industry data released on September 13. The net selling amounted to 839.7 billion won (US$624.8 million), marking a sharp decline from their previous monthly net buying of 63.26 trillion won in the year through September 11.
The drop in foreign bond holdings was the largest in five years, falling by about 12.9 trillion won from a record 356.6 trillion won on July 24 to 343.6 trillion won on September 2. This trend is attributed to the erosion of arbitrage opportunities as Korean bonds lost their yield advantage over U.S. assets after currency hedging.
Despite this, passive inflows tied to South Korea's inclusion in the World Government Bond Index (WGBI) helped cushion the selling pressure, preventing a more significant increase in net selling.
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