FOREIGN INVESTORS SHIFT TO SAFER MALAYSIAN ASSETS AMID MARKET VOLATILITY

By Harizah Hanim Mohamed

KUALA LUMPUR, March 28 (Bernama) -- Volatile stock markets, driven by global economic uncertainties and shifting policies, have unsettled investors, prompting a shift towards domestic money market funds in search of stability.  

Challenging the perception that foreign investors have exited the domestic market, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said they are instead parking funds in safer assets while maintaining exposure to Malaysia.  

"Global stock markets remain highly volatile. While foreign investors continue net selling on Bursa Malaysia, it is important to note that Malaysia’s foreign currency reserves have improved. We also observe a shift towards money market instruments, which offer modest returns but still yield around three per cent.  

“We sense they prefer to stay liquid in the money markets,” he told Bernama.

Mohd Afzanizam noted that as of February, foreign ownership in Malaysia Treasury Bills stood at 52.7 per cent, while Bank Negara Malaysia’s international reserves grew to US$118.0 billion as of 14 March 2025, up from US$116.4 billion at the end of January. (US$1 = RM4.43).

“That perhaps explains why the ringgit has remained resilient. Foreign investors are still in the Malaysian financial markets,” he said.  

Previously, Mohd Afzanizam highlighted that despite global challenges, the ringgit had gained 0.85 per cent year to date, ranking as the fourth-best-performing currency in Asia.  

According to Bloomberg data, Malaysia was the fourth-best performer among emerging currencies, trailing the Japanese yen, Singapore dollar, and offshore Chinese renminbi.  

By contrast, major emerging-market peers Indonesia and Turkey saw sharp sell-offs last week, weighing on sentiment across the asset class. The Indonesian rupiah has come under pressure, tumbling 2.97 per cent year to date, prompting Bank Indonesia to intervene to stem the slide.  

The rupiah has fallen to its lowest level since the 1997-98 Asian Financial Crisis, making it the region’s worst-performing currency and raising market concerns.  

"While investors remain cautious, this has unexpectedly spurred interest in ringgit-denominated assets,” he added.  

According to MIDF Amanah Investment Bank Bhd’s Fund Flow Report, 'From Growth to Gridlock', foreign investors extended their selling streak on Bursa Malaysia for the 22nd consecutive week, with a net outflow of RM1.25 billion.  

The trend is not unique to Malaysia. The report noted that foreign investors remained net sellers across eight Asian markets, with total outflows reaching US$564.9 million last week.  

South Korea led the region with a net inflow of US$1.68 billion, marking a sharp reversal after nine consecutive weeks of outflows. Meanwhile, Indonesian stocks fell 1.6 per cent last Friday, capping a difficult week as concerns over fiscal health, government policies, and declining demand dampened investor confidence. 

The benchmark index has fallen more than 11 per cent this year, making it one of Asia's worst performers and triggering further weakness in the rupiah, which posted its second consecutive weekly decline.  

Market uncertainty deepened amid concerns over US trade tariffs, prompting investors to seek safer assets such as gold.  

Most Asian currencies weakened, while regional stock markets posted mixed performances.  

-- BERNAMA