Malaysia’s capital market experienced a significant turnaround in August 2026, posting a net inflow of RM13.9 billion, marking a 15-month high after a net outflow of RM5.3 billion in July. This shift was primarily driven by a substantial reversal in bond market activity.

According to a report from Kenanga Investment Bank Bhd, foreign investors returned as net buyers of Malaysian bonds in August, injecting RM15.9 billion—the third-largest monthly inflow on record and the highest since September 2013. This was a notable change from July’s RM5.6 billion net outflow. The bank attributed the shift to global duration repricing amid rising fiscal concerns in the United States, coupled with Malaysia’s strong domestic economic fundamentals that made local debt more attractive to foreign investors.

Foreign holdings of Malaysian securities rose to RM320.1 billion in August from RM304.2 billion in July, raising foreign ownership of total outstanding debt to 13.5% from 12.9%. Despite this overall growth, the recovery in Malaysian Government Securities (MGS) was partial, with holdings reaching RM235.2 billion in August, slightly lower than the RM237.6 billion recorded in June.

In contrast to the rebound in bonds, foreign investors were net sellers in the equity market during August, recording outflows of RM2 billion compared to RM300 million in July. The selling pressure was primarily concentrated in the financial, industrial, and technology sectors.

The mixed capital flow trends underscore the complexity of investment decisions amid global uncertainties, with foreign investors shifting toward fixed income assets in Malaysia while reducing equity holdings during the period.