On the domestic front, the local market stayed tepid with the benchmark KLCI flat at -0.20%. It was a mixed bag for the recently concluded results season with banks and technology beating expectations. On the flipside, the oil and gas sector posted results that came below consensus.

Notable news concerning companies in our portfolio holding include Sime Darby which announced that it plans to acquire Australia’s Onsite Rental Group Limited (Onsite). Onsite provides business-to-business equipment rental solutions in sectors ranging from energy, industrial and commercial. We view this news positively as management takes a more proactive approach in streamlining the group’s assets as well as recycling capital. The stock also provides an attractive dividend yield of 5%.

KPJ Healthcare also announced last week that it plans to dispose its Indonesian operations for a total consideration of RM150.2 million. A subsequent report by Bloomberg that private equity firm CVC Capital Partners was looking to acquire a stake in the hospital operator also contributed to the wave of positive news flow which lifted its share price.

On politics, UMNO will be holding its party polls in the coming weeks with over 8 candidates vying for the three Vice President posts. It was decided in prior meetings that the position of the president and deputy president will not be contested at the upcoming party election.

There were no major portfolio action for our domestic funds. Cash levels range between 5%-15% for our conventional funds, while Shariah funds had a higher cash buffer between 15%-20%.

Despite a data-heavy week, the Asian credit space stayed resilient amidst volatility seen in rates. Asian investment grade (IG) spreads tightened by 7 bps translating to an equivalent yield of 5.67%. In the high-yield space, spreads tightened by 62 bps providing an equivalent yield of 13.10%.

In terms of fund flows, emerging market (EM) bond funds experienced an outflow for the third consecutive week to the sum of US$ 1.6 billion. However on a YTD basis, we are still seeing a net inflow of US$ 6.10 billion.

Activities slowed slightly in the primary market compared to the prior week. We took part in the issuance of a 5-Year bond by Kasikornbank at 5.45%. During the week, HSBC also issued US$ 7 billion of senior bonds across 3 tranches, where it recorded a total bid-to-cover ratio of over 3 times overall. We took part in the 21 years non-callable 20 years tranche at 6.332%.

On China property, it was a firmer week for the sector where price action for bonds were either flat or marginally higher by 0.5 points. We saw a recovery in contracted sales for some of the top 10 developers in the country which increased 35% m-o-m. However, there has been a divergence between the performance between cities, where higher-tiers have been notably outperforming lower-tier ones.

Back home, MGS yields retraced higher between 4 – 15 bps in line with the hawkish sentiment globally. Bond traders were mostly at the side-lines and taking a cautious stance in anticipation of Bank Negara Malaysia (BNM) upcoming monetary policy meeting next week on the 9 March.

In terms of government tenders, we saw the reopening of a 15-Year sustainability GII with an order book size of RM3.5 billion available for public subscription with the remaining RM2.0 billion is via private placement. The issuance saw a lower-than-expected bid-to-cover ratio of 1.99 times.

There were no major corporate bond issuances last week. Though, some notable ones that are expected to tap the bond market soon are TNB and YTL Power.

On portfolio action, we were mainly net sellers for the week offloadin govvies and taking profit in corporate private debt securities. We maintained a neutral duration length between 5 to 6 years with cash levels ranging between 6%-10%.