Foreign investors remained net buyers in Malaysia’s bond market during the first half of 2025, contributing a cumulative net inflow of RM21.4 billion by June, according to RAM Ratings.
However, June recorded a net outflow of RM5.4 billion, reversing the strong RM13.4 billion inflow in May. RAM attributed this to selloffs in long-term Malaysian Government Securities (MGS) and Government Investment Issues (GII), as well as short-term Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB), with RM5.3 billion and RM1 billion respectively.
In contrast, corporate bonds continued to draw foreign investments, posting a net inflow of RM903.4 million in June, up from RM550 million in May.
This marks only the second month of overall net foreign outflows in 2025, after February’s RM1.1 billion.
RAM noted that foreign investor interest may remain subdued in July as the Aug 1 deadline for higher US reciprocal tariffs approaches, and uncertainties persist over a potential deal. Expectations of a longer pause in US monetary easing, following higher-than-expected July inflation, further dampen emerging market appeal.
Markets currently anticipate the US Federal Reserve to maintain its policy rate at 4.25–4.5% at the July meeting.
As of July 17, the ringgit had weakened slightly to 4.25 against the US dollar from 4.21 at end-June.
