Yield Hunters Bingeing on Malaysian Bonds Boost Foreign Holdings

Foreign ownership of Malaysian government bonds rose to a fresh record in August as investors scouring the world for higher-yielding assets boosted demand.

Overseas funds held an unprecedented 213.9 billion ringgit ($53 billion) of the nation’s notes at the end of last month, a 2 percent increase from July, according to central bank data released in Kuala Lumpur Wednesday. Though the yield on 10-year sovereign debt has slumped 65 basis points this year to 3.52 percent, the securities remain relatively attractive in a global environment where $9 trillion of government securities offer sub-zero yields.

“Foreign-flows sentiment across emerging markets remains positive, and Malaysian debt securities being one of the higher-yielding ones should benefit,” said Winson Phoon, a fixed-income analyst at Maybank Investment Bank Bhd. in Kuala Lumpur. Purchases were also driven by increased demand for Shariah-compliant notes following a move by JPMorgan Chase & Co. to include sukuk in its indexes, he said.

Foreign ownership of Malaysian government and corporate bonds and bills climbed 2.5 percent in August to 246.9 billion ringgit, the highest since October 2014, data from Bank Negara Malaysia show.

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