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Michael Hasenstab buying Malaysia's Government Debt

Fund Manager of Templeton Global Bond - Dr. Michael Hasenstab's latest bold move is buying into more than 10% of Malaysia's government debt last month with $18.54 billion (RM62.13 billion).  Templeton has delivered on average an annual return of 8.1% in the past decade vs 4.4% average by all world bond funds.

In Malaysia's case, according to Prime Minister and Finance Minister Datuk Seri Najib Razak, Malaysia's national debt is at 52.8% of its Gross Domestic Product (GDP) or RM 568.9 billion as of June this year.  97.1% of that or RM552.7 billion is made up of domestic borrowings, while the 2.9% or RM16.2 billion comprises offshore debt.

The quantum of Malaysia’s national debt, however, has progressively increased over the years, with the country borrowing RM547.6 billion in 2013, RM501.6 billion (53.3 per cent debt to GDP level) in 2012, RM456.1 billion (51.5 per cent) in 2011 and RM407.1 billion (51.1 per cent) in 2010.

Dr. Michael Hasenstab is known for taking bold move.  He invested in Irish debt when no one dare to.  In early 2013, it bought into $400 million newly issued pro-Russian Ukraine bonds.  Templeton is now the biggest single investor in Hungary, Ukraine and Uruguay, holding 14.2%, 13.6% and 10.5% of their debt respectively.

Why is he investing heavily into Hungary, Ukraine, Uruguay and etc?  His rationale is "Whether you’re talking about China or Ukraine, these countries are not monolithic … Peeling back the layers to see what motivates people, that appeals to me."

Reference: 

Malaysia Chronicle, 2014-11-18, "Who Calls the Shots!  Meet Michael Hasenstab -the Foreigner who single-handedly holds 10% of Putrajaya's Debt."