In summary:
§ FTSE Russell announced that Malaysia will remain in its World Government Bond Index (WGBI) with 0.4% weight of the index. However, Malaysia will remain on the watch list until its next interim review in March 2020.
§ The statement highlights that FTSE Russell and index users are encouraged by the efforts and engagement of Malaysian authorities to address concerns on market liquidity and accessibility. They will continue to monitor conditions in the bond and FX markets in order to assess efficacy of the reforms.
§ Earlier Bank Negara Malaysia (BNM) said they had positive engagements with FTSE following further liberalization of the foreign exchange administration (FEA) rules to improve market liquidity and accessibility. While these measures have helped to sustain Malaysia’s position in the WGBI for now, FTSE retains Malaysia on the watch list to ensure sufficient progress of reforms.
Source: UOB, Miss Julia Goh, Senior Economist, United Overseas Bank (Malaysia) Bhd (UOB Malaysia)