On Monday, global stock market indices provider FTSE Russell placed Malaysia's market accessibility level in its World Government Bond Index under a review considering a downgrade from the current level of 2 (highest level of accessibility) to 1, due to concerns about market liquidity, at the end of the review period in September.
The downgrade may make the Malaysian local government ineligible for the index that helps with exposure to wider global investors. (Source: TheEdge Market news)
Double Drops !!!
Following the release of the news, Malaysian Ringgit and FBM KLCI tumbles the next day due to heavy foreign selling. USD/MYR hitting a low of 4.14 at the time of writing and seems that it will continue to falls further, if Bank Negara Malaysia decided to lower down the benchmark interest rate (OPR) in coming months.
While investors scramble to react from the news, what is this WGBI actually?
Let us have some understanding and let's get the class started below...
