The TR BPAM All Index ended the week slightly higher at point 135.77, marking an increase of 0.01 per cent from the previous week’s reading of 135.75 point.
MGS saw reduced buying interest over the week with yields inched up by two to seven basis points (bps) from the two-year curve point onwards as market waited for the re-opening of the seven-year MGS benchmark bond as well as the release of the second quarter gross domestic product (GDP) data.
The Private Debt Securities segment, on the other hand, saw considerable buying interests with yields of AAA-curve easing by three to six bps from the belly of the curve.
On Monday, the Department of Statistics, Malaysia reported that the Industrial Production Index (IPI) ascended by seven per cent in June 2014 as compared to the same month a year ago, underpinned by stronger performance in all three indices: manufacturing, mining and electricity. According to the report, manufacturing output registered an increase of 9.1 per cent, mining output rose 1.4 per cent and electricity output edged up by 6.5 per cent on a yearly basis.
On Friday, the Department of Statistics, Malaysia reported that Malaysia’s GDP expanded at a faster-than-expected rate of 6.4 per cent in the second quarter of 2014, against the 6.2 per cent recorded in the first quarter of the year.
The manufacturing and services sector, which registered a robust growth of 7.3 andsix per cent respectively, were cited as the main forces driving the supply side.
On the demand side, net exports accelerated on the back of stronger exports which grew remarkably at 8.8 per cent while imports advanced by 3.9 per cent. Private Final Consumption Expenditure remained buoyant with a growth rate of 6.5 per cent.
Given the tremendous performance in the economy in the first half of the year, Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz expects the nation’s economic growth to exceed 5.5 per cent for this year relative to the earlier projection of 4.5 to 5.5 per cent.
Top 10 most active bonds
The turnover for the top ten most actively traded bonds aggregated at RM18.3 billion, increased by approximately 13 per cent from RM16.19 billion the previous week. The off-the-run MGS maturing on Aug 15, 2014 was the most heavily traded sovereign bond over the week with RM5.31 billion changed hands.
Sovereign bond auction
On August 12, 2014, the Government of Malaysia announced the re-opening of the seven-year MGS benchmark bond maturing on Sept 30, 2021 with an issuance size of RM3.5 billion.
The tender, which had closed on August 14, 2014, saw lukewarm bidding with a bid-to-cover ratio of 2.000. The lowest, average and highest yields are 3.788, 3.803 and 3.812 per cent respectively.