M’sia remains on FTSE Russell’s fixed income watchlist

by MARK RAO/ pic by BLOOMBERG

Malaysia has not been removed from the World Government Bond Index (WGBI) but continues to be on the watch list together with the world’s second largest economy China. 

FTSE Russell, the global index and data provider, announced early this morning the results of its much-anticipated annual review for countries monitored by its global equity and fixed income indices.

There were worries that Malaysia could be removed from the list after it was downgraded into the watch list in April this year. 

“Malaysia will be retained on the watch list for potential downgrade from its current market accessibility level of ‘2’,” FTSE Russell said in a statement.  

“FTSE Russell will continue to engage with market participants to understand the practical impact of recent initiatives announced by Bank Negara Malaysia (BNM) to improve market liquidity and accessibility.”

Billions of dollars’ worth of capital moved out of the country since April after FTSE’s threats. 

BNM had introduced a slew of initiatives to boost market accessibility and liquidity last month, while further liberalising its foreign exchange administration policy.

Malaysia has been included in the WGBI since 2004 but is being considered for a potential downgrade to ‘1’ which would render the country ineligible for inclusion in the index.

The WGBI is a widely used metric for global, fixed-rate local currency investment grade government bonds markets, covering 22 markets.

Ringgit rose this morning but the stock market dropped seven points, widening it year-to-date drop to 8. 86% at noon today.