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

Lu, Yinqiu; Yakovlev, Dmitry

doi:10.5089/9781484353073.001

Cited by 5 publications

(4 citation statements)

References 7 publications

(6 reference statements)

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“…These results underscore the importance of expanding the investor retail base by deepening financial markets. This result is in line with Lu and Yakovlev (2018) who present evidence from Malaysia 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. Reforms that develop the nonbanking sector, particularly by improving the regulatory framework that encourages investment in long-term securities, are thus crucial for the diversification of the domestic retail investor base.…”

supporting

confidence: 89%

Indonesia

2023

IMF Staff Country Reports

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supporting

confidence: 89%

Indonesia

2023

IMF Staff Country Reports

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“…In May 2017, the index provider noted that "changes in the NDF have impacted MGS liquidity resulting in reduced weight over the past six months." The reduction in Malaysia's index weight was also due to other reasons such as lower net issuance relative to other markets and inclusion of new bond markets in the index (see alsoLu and Yakovlev, 2018). ©International Monetary Fund.…”

mentioning

confidence: 99%

Benchmark-Driven Investments in Emerging Market Bond Markets

Arslanalp¹,

Goel²,

Sgherri³

2020

IMF Working Papers

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This paper reviews the role of benchmark-driven investments in EM local bond markets. We provide an overview of how key EM bond benchmark indices are constructed, how they affect the behavior of investment funds, and what are the likely implications for capital flows and policy-making. Several methods are presented suggesting that the amount of assets benchmarked against widely followed EM local-currency bond indices have risen fivefold since the mid-2000s to around $300 billion. Our review suggests that the benefits of index membership may be tempered by portfolio outflow risks for some countries. This is because benchmark-driven investments may increase the importance of external factors at the expense of domestic factors, raising the risks of outflows unrelated to recipient country fundamentals. Some countries may be disproportionately exposed to these risks, reflecting the way the indices are constructed.

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“…Agur, Chan, Goswami, and Sharma (2018) show that EM local‐currency sovereign bond yields co‐move with international interest rates. In Malaysia, Lu and Yakovlev (2018) show that an efficient FX derivatives market could help attract a wider range of FPIs, while Grigorian (2019) studies the relationship between portfolio flows and exchange rate volatility. Kemoe and Zhan (2018), in a sample of 33 EMDCs, present evidence that higher fiscal transparency can reduce sovereign interest rate spreads and increase foreign holdings of sovereign debt.…”

Section: Literature Reviewmentioning

confidence: 99%

Nonresident holdings of domestic debt in Nigeria: Internal or external driven?

Hosny

2020

African Development Review

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Foreign holdings of domestic debt instruments in Nigeria have been increasing. Using data over 2007M1-2019M1, we show that, on average, global factors (global interest rates, oil prices) seem to carry more weight than domestic factors (treasury bills rate and domestic risk) in foreign portfolio invetsors' decisions in Nigeria. Specifically, we show that foreign participation is, in the long run, positively correlated with oil prices and profitable rates of return on local-currency instruments, but negatively correlated with exchange rate depreciation pressures. In the short run, oil prices, opportunity cost of funds and perception of Nigeriaspecific risks also play a role. These results highlight the volatile short-term nature of such flows and call for a package of policy reforms to attract longer term direct investments.

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

Cited by 5 publications

References 7 publications

Indonesia

Indonesia

Benchmark-Driven Investments in Emerging Market Bond Markets

Nonresident holdings of domestic debt in Nigeria: Internal or external driven?

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