Malaysia’s bond market sees continuous expansion in 1Q19

The amount of negative-yielding bonds globally have jumped 47% to more than $12 trillion this year as signs that the Federal Reserve and the European Central Bank will ease spurred a bond rally.

KUALA LUMPUR: Malaysia is among the emerging East Asian economies that saw the local currency bond market continue to expand over the first quarter of 2019 (Q1 2019), despite trade conflicts and moderating global growth, said the Asian Development Bank (ADB). 

In its latest issue of the Asia Bond Monitor- June 2019 quarterly report released today, the ADB said the outstanding amount of Malaysia’s local currency bonds totalled US$353.0 billion at end-March 2019, registering a 7.6 per cent year-on-year (y-o-y) growth from Q1 2018.

“Growth stemmed largely from government bonds, particularly central government bonds as their issuance picked up in Q1 2019, while corporate bonds also contributed to the positive growth, but on a smaller scale,” it added.

The report said Malaysia’s government bond market size stood at US$188.0 billion at end-March, up 8.7 per cent y-o-y in local currency terms, mainly driven by an expansion of central government bonds. 

“The corporate bond market saw a y-o-y growth of 6.4 per cent over the first quarter to US$165.0 billion,” it added.

The report also highlighted that Malaysia’s sukuk (Islamic bond) market remained the biggest in emerging East Asia, where 61.0 per cent of total local currency bonds outstanding, comprised sukuk. 

“In Malaysia, 47.0 per cent of all government bonds are structured following Islamic principles, while 76.9 per cent of corporate bonds are sukuk,” it said.

The emerging East Asia economies comprise China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam. - Bernama