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Malaysian bond outflows hit 11-month high as rate-cut bets fade
Oct 07, 2025
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3 min read
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(Oct 7): Malaysian bonds posted their largest foreign outflows in 11 months, weighed down by fading expectations of interest-rate cuts and a wall of maturities.
Global funds pulled US$1.7 billion (RM7.17 billion) from the nation’s sovereign and corporate bonds in September, the most since October 2024. They had ploughed US$726 million into Malaysian debt in August.
The withdrawals underscore how rate-cut bets have faded with the economy seeing low inflation and the central bank predicting resilient domestic demand through 2026. Swaps are priced in a steady policy rate over the next six months. That’s weighing on demand at government bond auctions, with this week’s sale drawing the weakest bid-to-cover ratio of the year.
Foreign outflows were driven by the diminishing “likelihood of further interest-rate cuts” due to economic growth prospects, said Chandresh Jain, an EM Asia rates and markets strategist at BNP Paribas in Singapore. The redemption of foreign holdings in an RM27 billion bond that matured in September also impacted the flows, he said.
The sell-off is visible in stocks too. Malaysian equities saw the highest net selling by global investors on Oct 6 in a month. Jain expects foreign inflows to return to Malaysian bonds in the fourth quarter on further Federal Reserve rate cuts.
Meanwhile, investors will be watching Malaysia’s 2026 budget announcement Friday for any signs of stimulus and fiscal consolidation.
Uploaded by Arion Yeow
Article By Marcus Wong / Bloomberg
Source: Malaysian bond outflows hit 11-month high as rate-cut bets fade (Tuesday, 07 Oct 2025). The Edge. Retrieved from https://theedgemalaysia.com/node/773068
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