Malaysia scores record flows as bond investors favour Asia

SINGAPORE/BENGALURU: Bond investors fleeing the United States are finding a haven in stable and lucrative Asian debt markets, with Malaysia leading the pack as the destination for foreign money.
Foreign ownership of government bonds from Indonesia to India is soaring, becoming a tailwind for markets that have traditionally been dominated by domestic players.
"We're in a very good environment for Asian investments," said David Chao, global market strategist for Asia Pacific at Invesco. "The ingredients are in place for Asia, for emerging markets to outperform."
The biggest appeal is the combination of monetary easing and currency appreciation they are offering for the first time in four years, precipitated by US President Donald Trump's policies and a weakening dollar.
Malaysian bonds recorded their biggest monthly foreign inflows since 2014 last month, around US$3.15 billion. India and Indonesia also got significant inflows.
Across Asia, low inflation and policy rates at their peak contrast with the United States, Europe or Japan, where fiscal profligacy has undermined the value of long-term debt.
Subdued growth and expected rate cuts further enhance the appeal of locking in peak rates, with the potential for capital appreciation on bonds as yields decline. A weaker dollar also gives investors scope to profit from currency appreciation.
"Emerging market assets fundamentally will do well when US rates are dropping, and US dollar is weakening," said Shah Jahan Abu Thahir, head of global markets for Southeast Asia at Bank of America.
"The last few years, it was the reverse...so now, anecdotally, there's definitely some interest potentially coming back."
BOND ALLURE
Data from regional regulatory authorities and bond market associations showed foreign investors bought US$34 billion worth of Asian debt securities so far this year - the largest amount in the first five months of a year since at least 2016.
That's just the beginning of flows into these under-owned markets, analysts said, and likely to continue so long as economies and monetary settings in this part of the world remain insulated and more stable than developed markets.
"We're seeing this fixed income interest across the board in the bigger and small EM countries - Thailand, Philippines, Indonesia and India," Sue Lee, head of markets for Asia South at Citi Group, said.
India has been one of the more active markets for clients, due to the string of rate cuts, she said.
Investors are positioning themselves ahead of expected rate cuts, locking in yields with the anticipation of bond prices rising as rates decline.
Malaysia, where the market remains divided on rate-cut prospects, has an edge over Thailand, where investors reckon the cycle is almost over.
Thailand had outflows of about US$53.6 million in May, as investors shunned a market with one of the lowest returns in the region and hit hardest by Trump's trade tariffs. The central bank has hinted it has limited room to cut rates further, while the government has said it wants a weaker currency. One-year bond yields are below the 1.75 per cent policy rate.
Indonesian government bonds (IndoGBs) offer attractive yields, with a two-percentage point premium over US Treasuries on 10-year IndoGBs. However, concerns over government spending and political uncertainty have tempered investor enthusiasm.
Investors say Malaysian bonds offer more value, with its central bank yet to start cutting rates despite weaker growth, and a relatively robust ringgit.
Abu Tahir said bonds in Indonesia are regarded as expensive while Thailand has rate cuts priced in and is already at fair value.
"It's about what's the expectation and what's the market pricing," he said, predicting Malaysia will cut rates in July, though the market is more divided.
"So that's like where the value is because if everybody is expecting a cut, it's already been priced in," he said.
The lack of liquidity in Asian bond markets has long been a constraint for investors, with rapid foreign capital flows capable of triggering price volatility.
Last month, a rush of capital into Hong Kong caused a spike in its usually stable currency.
But analysts say there is less cause for concern, given a benign inflation environment and low foreign ownership.
"For the past five years, it's been tumbleweed in terms of portfolio inflows into the region, so actually it wouldn't be bad to see more inflows back into the region," said Claudio Piron, a strategist at Bank of America.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Malay Mail

an hour ago

• Malay Mail

Investors brace for oil price spike, rush to havens after US bombs Iran nuclear sites

NEW YORK, June 22 — A US attack on Iranian nuclear sites yesterday could lead to a knee-jerk reaction in global markets when they reopen, sending oil prices higher and triggering a rush to safety, investors said, as they assessed how the latest escalation of tensions would ripple through the global economy. The attack, which was announced by President Donald Trump on social media site Truth Social, deepens US involvement in the Middle East conflict. That was the question going into the weekend, when investors were mulling a host of different market scenarios. In the immediate aftermath of the announcement, they expected the US involvement was likely to cause a selloff in equities and a possible bid for the dollar and other safe-haven assets when trading begins, but also said much uncertainty about the course of the conflict remained. While Trump called the attack 'successful', few details were known. He was expected to address the nation later on Saturday. 'I think the markets are going to be initially alarmed, and I think oil will open higher,' said Mark Spindel, chief investment officer at Potomac River Capital. 'We don't have any damage assessment and that will take some time. Even though he has described this as 'done', we're engaged. What comes next?' Spindel said. 'I think the uncertainty is going to blanket the markets, as now Americans everywhere are going to be exposed. It's going to raise uncertainty and volatility, particularly in oil,' he added. Spindel, however, said there was time to digest the news before markets open and said he was making arrangements to talk to other market participants. Oil prices, inflation A key concern for markets would centre around the potential impact of the developments in the Middle East on oil prices and thus on inflation. A rise in inflation could dampen consumer confidence and lessen the chance of near-term interest rate cuts. 'This adds a complicated new layer of risk that we'll have to consider and pay attention to,' said Jack Ablin, chief investment officer of Cresset Capital. 'This is definitely going to have an impact on energy prices and potentially on inflation as well.' While global benchmark Brent crude futures LCOc1 have risen as much as 18 per cent since June 10, hitting a near five-month high of US$79.04 on Thursday, the S&P 500 .SPX has been little changed, following an initial drop when Israel launched its attacks on Iran on June 13. Before the US attack yesterday, analysts at Oxford Economics modelled three scenarios, including a de-escalation of the conflict, a complete shutdown in Iranian oil production and a closure of the Strait of Hormuz, 'each with increasingly large impacts on global oil prices.' In the most severe case, global oil prices jump to around US$130 per barrel, driving US inflation near 6 per cent by the end of this year, Oxford said in the note. 'Although the price shock inevitably dampens consumer spending because of the hit to real incomes, the scale of the rise in inflation and concerns about the potential for second-round inflation effects likely ruin any chance of rate cuts in the US this year,' Oxford said in the note, which was published before the US strikes. In comments after the announcement yesterday, Jamie Cox, managing partner at Harris Financial Group, agreed oil prices would likely spike on the initial news. But Cox said he expected prices to likely level in a few days as the attacks could lead Iran to seek a peace deal with Israel and the United States. 'With this demonstration of force and total annihilation of its nuclear capabilities, they've lost all of their leverage and will likely hit the escape button to a peace deal,' Cox said. Economists warn that a dramatic rise in oil prices could damage a global economy already strained by Trump's tariffs. Still, any pullback in equities might be fleeting, history suggests. During past prominent instances of Middle East tensions coming to a boil, including the 2003 Iraq invasion and the 2019 attacks on Saudi oil facilities, stocks initially languished but soon recovered to trade higher in the months ahead. On average, the S&P 500 slipped 0.3 per cent in the three weeks following the start of conflict, but was 2.3 per cent higher on average two months following the conflict, according to data from Wedbush Securities and CapIQ Pro. Dollar woes An escalation in the conflict could have mixed implications for the US dollar, which has tumbled this year amid worries over diminished US exceptionalism. In the event of US direct engagement in the Iran-Israel war, the dollar could initially benefit from a safety bid, analysts said. 'Do we see a flight to safety? That would signal yields going lower and the dollar getting stronger,' said Steve Sosnick, chief market strategist at IBKR in Greenwich, Connecticut. 'It's hard to imagine stocks not reacting negatively and the question is how much. It will depend on Iranian reaction and whether oil prices spike.' — Reuters

New Straits Times

an hour ago

• New Straits Times

MONEY THOUGHTS: A practical blueprint for modest wealth

This is our current reality: United States President Donald Trump's asinine trade tariff tantrum will make life tougher for both Americans and the rest of the world, because the economic friction introduced by his tariffs will lower Earth's potential aggregate economic growth. The reduction will make life less palatable for most of Earth's 8.2 billion people. Thankfully, there are ways for regular people to restructure their finances to benefit from the economic and capital market volatility stemming from bad policies gushing out from the once-respected White House like a high-pressure stream of raw sewage. In April, Forbes magazine released its 39th annual World's Billionaires list. It unearthed a record number of 3,028 billionaires with an aggregate net worth of US$16.1 trillion. The mean net worth of those 3,000-plus super-wealthy men and women this year: US$5.3 billion. The world's first billionaire was oilman John Davison Rockefeller — later referred to as John D. Rockefeller Sr when his son John D. Rockefeller Jr was born. JDR Sr became a billionaire in 1916 at the age of 77. To their credit, he and his progeny nurtured a culture of philanthropy that benefitted millions over many decades. JDR Sr died in 1937 at the age of 97 years and 10 months. Five years before his demise, in writer John Thomas Flynn's book God's Gold: The Story of Rockefeller and His Times, JDR Sr is quoted saying: "I believe the power to make money is a gift from God — just as the instincts for art, music, literature, the doctor's talent, the nurse's, yours — to be developed and used to the best of our ability for the good of mankind. "Having been endowed with the gift I possess, I believe it is my duty to make money and still more money; and to use the money I make for the good of my fellow man according to the dictates of my conscience." I find that almost century-old statement of mission and intent (from 1932) inspiring. LESSONS AND PRINCIPLES I recognise it is unlikely any of Earth's current crop of 3,028 billionaires will read this Money Thoughts column, including the 19 of them who are Malaysians with average net worths of about US$3 billion or RM12.7 billion. I probably don't have anything of value to share with those super-elite individuals who account for 0.000037 per cent of all living humans. However — and this I know from decades of client interactions — when it comes to attaining modest levels of wealth, say in the much lower RM100,000 to RM10 million range, I do have viable lessons and principles to share with many people. Toward that end, there is a multi-part blueprint which I'm happy to share with ambitious readers. Note: Meaningful levels of domestic, regional, and global philanthropy can be achieved by the many millions of people worldwide who are capable of building wealth levels in the range of RM100,000 to RM10 million. So, to help such individuals, I've been laying the foundation of this blueprint over several weeks. Here it is: 1. Recognise the value of two distinct processes; 2. Embrace high market volatility as a long-term aid to wealth-building; 3. Harness a logical long-term investment strategy; and 4. Use a readily available banking facility to put your plan on autopilot. Allow me to elaborate: 1. The Two Processes The six-step financial planning process and a logical three-part wealth-building process can be of use to almost all adults of sound mind. Read that recent Money Thoughts column for a rundown of both processes. Do take note of the second process, which comprises one principle, one strategy and one system. Each of which will be sequentially covered below to provide you — hopefully — with a robust framework to build future wealth for your family, most likely within the target range of RM100,000 to RM10 million. 2. Volatility's hidden value In both business and investing, the most straightforward way to make money is to buy low, and sell high. It is a powerful principle. When we understand this unchanging economic truth, we can begin looking upon asset price volatility as a beneficial wealth-building mechanism. Elaboration: 3. Understand dollar-cost averaging Unfortunately, a mere cerebral acceptance of the validity of buying low and selling high is useless unless we can also implement a disciplined strategy to do so consistently. The dollar-cost averaging (DCA) fits the bill. Perfectly. 4. Rely on standing instructions Finally, even after we reach the point of understanding that it is economically beneficial to implement a personal DCA strategy when aiming to build lifelong wealth, we still need a pragmatic system to automatically and emotionlessly implement that strategy. The system I recommend hinges on bank Standing Instructions that regularly shunt cash out of our bank account into, ideally, a diversified savings and investment portfolio for decades on end. Digesting all the material in today's column requires time and attention. I know most readers won't embark on the full journey, but the minority that does will prosper; and in all likelihood, bigtime. © 2025 Rajen Devadason

The Sun

2 hours ago

• The Sun

M'sian customer frustrated after delivery rider allegedly demands tip

TIPPING culture is generally not practised in Malaysia, unlike in countries such as the United States, which is why Malaysians are generally not obliged to tip. The issue of tipping was recently highlighted in a Threads post after a Malaysian customer alleged that a delivery rider had requested a tip. The request did not sit well with the customer, who wrote in their post: 'Has Western culture reached Malaysia already? I give tips when I want to. I don't like being asked to do so.' The post sparked discussion about whether one is obligated to tip service workers — especially when a tip is explicitly requested. Meanwhile, others encouraged the customer to report the delivery rider to the company, pointing out that the delivery fee had already been paid. 'In the United States, customers have to tip because there is no service charge there. But in Malaysia, self-service shops can impose a service charge, which is unfortunate,' one user noted. 'Their income comes from their salary, not tips. We understand that tipping is an act of gratitude, but we don't want it to become a norm or something expected. Regardless of whether they receive a tip or not, they should still perform their duties. We're not just paying for the food — we're also paying a service charge. And with food delivery, we're already paying a delivery charge,' another user commented.