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

_IMF Working Papers, April 26, 2018_

## Source details

**Canonical URL:** [Instruments, Investor Base, and Recent Developments in the Malaysian Government Bond Market](https://www.imf.org/en/publications/wp/issues/2018/04/26/instruments-investor-base-and-recent-developments-in-the-malaysian-government-bond-market-45798)

## Other formats

- [Markdown version](/en/publications/wp/issues/2018/04/26/instruments-investor-base-and-recent-developments-in-the-malaysian-government-bond-market-45798/index.md)
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## Bibliographic details
- Authors: Miss Yinqiu Lu, Dmitry Yakovlev
- Published: April 26, 2018
- Series: IMF Working Papers

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### Key findings
- Foreign holdings of Malaysian local currency (LCY) government bonds have increased since the global financial crisis.
- Micro-level bank by bank and fund by fund data shed light on the key features of LCY government bonds including their investor base.
- 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.
- Analysis of the risk related to foreign ownership ideally could also cover the role of derivatives.
- 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.

### Policy implications and recommendations
- Improve the efficiency and availability of the FX derivatives market to attract a wider range of foreign investors and deepen the LCY government bond market.
- Incorporate the role of derivatives into risk assessments of foreign ownership to capture FX and counterparty channels of vulnerability.
- Support and preserve domestic participants as the core investor base to promote market stability and proper functioning.

### Data and methodology notes
- Analysis is based on micro-level bank by bank and fund by fund data to identify investor strategies and exposures.
- Emphasis on interactions between cash bond holdings and FX derivative positions in assessing foreign investor behavior and risk.

### Subjects and keywords
- 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

*Source: Instruments, Investor Base, and Recent Developments in the Malaysian Government Bond Market — IMF Working Papers, April 26, 2018.*

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## Content in this bundle

- **1. Bank Data**
  - [1. Bank Data (Markdown version)](/-/media/files/publications/wp/2018/wp1895.pdf.md){rel="alternate" type="text/markdown"}
  - [1. Bank Data (PDF)](/-/media/files/publications/wp/2018/wp1895.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2018/04/26/instruments-investor-base-and-recent-developments-in-the-malaysian-government-bond-market-45798_