This is the second consecutive year that RAM Ratings has been honoured as Rating Agency of the Year, Malaysia by The Asset.
KUALA LUMPUR: The pace of foreign investment outflow slowed to 1.8% in January, compared to a 2.4% net outflow in December 2016, according to RAM Ratings.
The rating agency said foreign holdings of Malaysian Government Securities (MGS) still made up a significant 46% of total holdings (December 2016: 47.1%). In addition, fundamental demand for long-term investment appeared intact.
It said as a result of the moderating pace of foreign funds outflow, yields normalised, with a downward yield to maturity shift in all asset classes.
Bank Negara’s decision to hold the overnight policy rate (OPR) at 3.00% in January was consistent with its view that current volatility, growth and inflation expectations should contribute to the OPR staying put for now.
“We expect the rate to remain unchanged through the rest of the year, barring any significant deceleration in the current and expected momentum of economic growth, projected by RAM at 4.5% for 2017.
“Inflation came in below our expectations at 2.1% in 2016. Nonetheless, we expect the general improvement in global crude oil prices to lift inflation this year, accounting for the bulk of the projected upward momentum in price levels. For 2017, inflation is envisaged to clock in at 3%,” RAM said in a statement Friday.
Gross issuance of government securities summed up to RM14bil in January (December 2016: RM2bil).
The strong issuance coincided with the Government’s increased financing requirements this year. On the other hand, gross issuance of corporate papers paled, with a total issuance value of only RM1.6bil.
RAM Ratings said after an eventful month for global public policy in January, risk sentiment was now at a high.
“From the Trump administration’s eagerness to follow through on several new foreign policies to the rise of nationalism in Europe, uncertainty is still the flavour of the month and is likely to remain so in the foreseeable future,” it said.
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