The decision of the Norwegian state fund to reject emerging market bonds from the benchmark index that follows will not have a significant impact on Malaysia, says Governor of Bank Negara Malaisia (BNM) Nor Shamsiah Mohd Iunus.
She said that the impact will not be significant for Malaysia because the country has a large number of domestic institutional investors.
"If you look at the annual report, we have shown that even (if) the existence of a period of significant outflows, our bond yields have not shifted as much as other countries could experience when they suffered the same type of outflow.
"This is because we have a strong group of domestic institutional investors," she said at a press conference after she published today the results of the gross domestic product (GDP) in the first quarter in Malaysia.
Neither Shamsiya said that, despite the decision of the Norwegian state fund, the yield of Malaysia was maintained at the same level as at the beginning of this year.
"Bond yields have risen due to outflow, but recently fell again to the level we saw at the beginning of the year.
"This is a characteristic of the bond market. He would have inflows and leave. More importantly, we are here to ensure any flows and any movement on the ringgit course is neat and do not disturb the financial market or economic activity, "she added.
Earlier, during his presentation, the Governor said that the outflows in April amounted to 7.1 billion RM, which is the result of numerous external movements at the forefront, as well as the announcement of the Norwegian Fund of Sovereign Wealth, among other things.
"This is a normal feature of investing in financial assets. There are investors who take a short-term position, and the rest that takes a longer-term position, "she said.