KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
Malaysia is set to moderate its government bond issuance in 2H 2025, a move that aligns with fiscal discipline efforts and could support bond prices in the coming months. For fixed-income investors, this shift may signal a potential entry point, particularly in long-duration bonds, amid growing expectations of a rate cut cycle.
Bond Issuance Slows as Government Targets Fiscal Consolidation
The Malaysian government is expected to issue between RM64 billion and RM90 billion worth of MGS and GII in the second half of 2025 — a slowdown from RM91 billion in 1H. This reflects the administration’s push to achieve its reduced fiscal deficit target of 3.8% of GDP, down from 4.3% in 2024.
2025 Budget: Development spending allocation set at RM85 billion
Issuance cap: MGS and GII are only used to finance development expenditure
“We expect supply pressure to ease considerably,” said Kenanga Investment’s Wan Suhaimie.
Demand Remains Strong — Especially from Foreign Investors
Investor appetite remains robust:
Foreign holdings hit a record RM282.4 billion in May (22.5% of total government bonds)
Bid-to-cover ratios near 3x, showing strong demand at recent auctions
Malaysia’s institutional base, including EPF and pension funds, provides a solid absorption buffer. Any additional offshore demand would further tighten yields.
“Malaysia is a high-savings economy with deep local demand,” noted RAM Ratings' Woon Khai Jhek.
Market Watch: Monetary Policy in Focus
All eyes are now on Bank Negara Malaysia's (BNM) policy decision due July 9:
11 of 23 economists (Bloomberg) expect a 25bps rate cut
A potential easing cycle could begin after a pause since May 2023
Implications for Bonds:
Rate cuts tend to boost bond prices, especially on the long end of the yield curve
Traders remain cautious due to inflation uncertainties, but the bias is toward lower yields
“Yields may drift lower, with long-duration bonds likely benefiting more,” said RAM’s Woon.
Investment Takeaway
With reduced bond supply, strong local and foreign demand, and a potential monetary easing cycle, Malaysia’s fixed-income market is set for favorable risk-reward dynamics in 2H 2025.
Strategic Consideration:
Extend duration cautiously if expecting rate cuts
Diversify across MGS and GII to benefit from policy support
Monitor upcoming fiscal announcements and BNM guidance
💡 Investors seeking stability and income in a lower-yield global environment may find Malaysian bonds increasingly attractive over the next 6–12 months.
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