Saturday, 6 May 2017

(The Star) Bonds record bid-to-cover ratio of more than two times

PETALING JAYA: The Malaysian bond market remained resilient with the last two primary auctions of government bonds recording a healthy bid-to-cover ratio of more than two times, said the Financial Markets Committee (FMC).

Average daily trading volume in the secondary bond market trended higher to RM4.2bil, while non-resident holdings of long-term government papers were at 25.1% as at end April 2017.

Since April, non-residents have recorded portfolio inflows into Malaysian Government Securities (MGS) with maturity of less than three years and above five years.

In line with higher market demand, MGS benchmark yields eased lower between eight to 32 basis points (bps) across the yield curve, the FMC said.

As at end of April 2017, 34 fund managers have registered under the fund manager hedging framework with RM56.5bil of eligible assets under management (AUM).

The FMC added that the second series of initiatives to develop the onshore financial market, effective May 2, provided more flexibility to fund managers and corporates to manage their foreign currency exposure.

“In addition, residents may now undertake short-selling activities to manage interest rate exposure,” it said.

Along with broader market developments which saw increased interest in emerging market financial assets, the ringgit traded at 4.32 against the US dollar from 4.40 previously.

It noted that the onshore foreign exchange market continued to record a daily average volume of US$10bil, of which trading volume for the ringgit currency pairs increased to a daily average of US$6.3bil for April.

From this, the spot and forward transactions recorded an average of US$2.5bil daily.

The exchange rate remained stable with US dollar/ringgit one-month implied volatility recording a lower average of 4.5%.

“Average intraday movement recorded a daily average of 74 points while the bid-ask spread recorded an average of 24.3 basis points since end-February 2017,” it added.