KUALA LUMPUR: Foreign investor participation in the Malaysian bond market continued to grow for the fourth straight month in January 2026, with net foreign inflows reaching RM951.9 million, said RAM Rating Services Bhd (RAM Ratings).
In a statement, the rating agency said the net inflows were driven primarily by continued demand for Malaysian Government Securities (MGS) and Government Investment Issues (GII), which saw inflows of RM2.1 billion.
"This was partly offset by outflows from Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB) and corporate bonds, amounting to RM480.0 million and RM709.3 million, respectively,” it said.
RAM Ratings noted that net buying, however, moderated compared to previous months partly due to the wider US Treasuries-MGS yield differential last month and the cautious outlook on US Federal Reserve rate cuts.
The rating agency said the US 10-year Treasury yield rose 8.0 basis points month-on-month (m‑o‑m) to 4.26 per cent as at end-January, reflecting firmer global yields as markets reassessed the pace and timing of US monetary easing.
In contrast, it said, the 10‑year MGS yield declined 1.4 basis points m‑o‑m to 3.52 per cent, supported by resilient domestic demand and stable policy expectations.
"The resulting wider yield differential of 74.4 basis points (end-December 2025: 65 basis points) likely reduced the attractiveness of Malaysian bonds to foreign investors,” it said.
RAM Ratings said market focus on the March 2026 Federal Open Market Committee meeting has intensified, as investors reassess future interest rate trajectory amid the still resilient US labour market. - Bernama
