IMF Working Papers

Instruments, Investor Base, and Recent Developments in the Malaysian Government Bond Market

By Yinqiu Lu, Dmitry Yakovlev

April 26, 2018

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Yinqiu Lu, and Dmitry Yakovlev. Instruments, Investor Base, and Recent Developments in the Malaysian Government Bond Market, (USA: International Monetary Fund, 2018) accessed September 20, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Foreign holdings of Malaysian local currency (LCY) government bonds have increased since the global financial crisis. By exploring the micro-level bank by bank and fund by fund data, we are able to shed light on the key features of the LCY government bonds including their investor base. The data suggest that to gain exposure to the Malaysian credit, holding cash bonds is generally only one part of the strategy of foreign investors and in many cases FX derivatives are involved. The availability of an efficient FX derivatives market could help to attract a wider range of foreign investors and enrich the bond market. Meanwhile, the analysis of the risk related to the foreign ownership ideally could also cover the role of derivatives. The analysis also allows us to conclude that despite the importance of foreign investors, domestic participants, as the core investor base, could help to ensure the stability and proper functioning of the bond market.

Subject: Asset and liability management, Banking, Bonds, Financial institutions, Financial markets, Foreign exchange, International liquidity, Securities markets, Sovereign bonds

Keywords: Bond, Bonds, FX, FX derivative, FX derivatives, FX exposure, FX position, FX risk, FX volatility, Global, International liquidity, Investor, Local currency government bonds, Malaysia, Malaysian government securities, MGS holding, Secondary market, Securities markets, Sovereign bonds, WP

Publication Details

  • Pages:

    33

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2018/095

  • Stock No:

    WPIEA2018095

  • ISBN:

    9781484353073

  • ISSN:

    1018-5941

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