KUALA LUMPUR, July 8 (Bernama) -- Maybank Investment Bank Bhd sees the potential for five-year bond yields to rise between five and 10 basis points, from 3.32 per cent at present.
Vice-President and Head of Fixed Income Research Tan Chee Wee said bond yields have moved up significantly driven by fears that the US Federal Reserve was tapering off its bond-buying stimulus efforts and increasing interest rates.
"Going forward, if the data coming from the US continues to be positive, investors will think that the US Federal Reserve will taper bond-buying at a faster rate, thus causing yields to move up.
Tan noted that the local bond market was very attractive for foreign investors, given its vibrant and very liquid nature.
"Furthermore, there is no withholding tax in capital gains and interest income for foreigners," he told reporters after speaking at a Bloomberg panel discussion titled, "The Asean Fixed Income Roadshow", here today.
He said for the first half of the year, Malaysian corporate bond issuance amounted to RM29.9 billion.
Out of the amount, 27 per cent was issued by power-related companies, followed by property (11.5 per cent), plantation (seven per cent) and financial services (five per cent).
Earlier, in his presentation, Tan said the investment bank expected the country's economy to grow at 5.3 per cent this year, down from last year's 5.6 per cent, because of lower net external demand.
He said Malaysia's private consumption rate, for this year was estimated at 6.6 per cent (7.7 per cent last year) prompted by low inflation and unemployment and high salaries.
Bloomberg's roadshow, from July 4-18, kicked off in Singapore last Friday and would travel to the Philippines, Thailand and Indonesia, after its stint in Malaysia ended today.
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