KUALA LUMPUR: Malaysia's foreign portfolio outflows widened to RM6.8 billion in October from an outflow of RM2.1 billion in September, said UOB Global Economics & Market Research.
The reduction was seen across equities (October: -RM0.6 billion, September: -RM1.6 billion) and debt securities (October: -RM6.3 billion, September: -RM0.4 billion) amid tighter global monetary and financial conditions that exacerbated the ringgit weakness.
This turned year-to-date non-resident portfolio flows into a net outflow of RM1.9 billion in the first 10 months of 2022 from RM28.8 billion in January-October 2021).
UOB said Bank Negara Malaysia's foreign reserves had hit a two-year low last month after dropping for the third straight month by US$0.9 billion month-on-month to US$105.2 billion (end-September: -US$2.2 billion m-o-m to US$106.1 billion).
The latest reserves position is sufficient to finance 5.5 months of imports of goods and services and is 1.1 times of the total short-term external debt.
"We expect capital flows into emerging markets including Malaysia to remain volatile in the near term as tighter monetary policy globally and persistent US dollar strength continue to strain market liquidity and financial stability.
"Liquidity concerns aside, prolonged geopolitical tensions and weakening growth outlook for China are also exacerbating global recession risk, underpinning the existing risk-off sentiment and selective investment strategies across the region," UOB said.