The yield on Malaysia’s five-year government bonds dropped to an eight-month low on speculation Prime Minister Datuk Seri Najib Tun Razak will win elections on May 5 and continue with economic reforms. The ringgit was steady.
The FTSE Bursa Malaysia KLCI (FBMKLCI) index of stocks has risen 0.9 per cent since Najib dissolved Parliament on April 3.
The ruling Barisan Nasional coalition is confident of gaining another 15 federal seats due to infighting in the opposition camp, online newspaper Malaysian Insider reported on April 13, citing coalition information chief Ahmad Maslan.
Najib has implemented a US$444 billion, 10-year infrastructure spending plan to propel the nation to developed status by 2020.
“Malaysian bonds are being sought because investors are positioning on expectations that Barisan will win,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd in Singapore.
The yield on the 3.26 per cent bonds due March 2018 was steady at 3.16 per cent as of 10:55am in Kuala Lumpur, according to data compiled by Bloomberg. The yield touched 3.15 per cent earlier, the lowest level for a benchmark five-year note since July 26.
The cost to insure five-year Malaysian government bonds using credit-default swaps has declined six basis points this month to 84 basis points, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The ringgit was little changed at 3.0398 per dollar, according to data compiled by Bloomberg. It has gained 1.8 per cent this month. The currency’s 12-month non-deliverable forwards rose 0.2 per cent to 3.0956, a 1.8 per cent discount to the spot rate. One-month implied volatility, a measure of exchange-rate swings used to price options, fell six basis points to 6.91 per cent. — Bloomberg