Macro and Politics

* During the week of February 28 – March 7, foreign investors recorded a net purchase of USD216.3mn in the equity market, marking the strongest foreign inflow since the week of January 24. Meanwhile, they were net sellers in the bond market (excluding repo transactions), registering an outflow of USD159.mn, which led to a slight decline in their share of the total bond stock to 8.1% from 8.2%. In ytd terms, there has been a foreign inflow of USD440mn and USD2bn to the equity and the bond market (excluding repo transactions), respectively. In annual terms, the equity experienced a cumulative foreign outflow of USD2bn, while the bond markets (excluding the repo transactions) saw a cumulative foreign inflow of USD18.1bn. Moreover, During the period of February 28 – March 7, residents’ FX deposits rose notably, primarily driven by corporate FX demand, bringing the total increase since the beginning of the year to USD7.4bn. Accordingly, during this period, the residents’ total FX deposits (including gold, price adjusted) saw a palpable increase of USD2.5bn in the week of February 28 – March 7. Besides, the CBT’s gross FX reserves climbed by USD4.6bn to USD170bn, while net international reserves surged by USD5.9bn to USD74.2bn. Net reserves excluding swaps rose by USD5.1bn to USD65.7bn, while swap stock increased by USD0.8bn to USD8.5bn.

*In February, home sales reached 112,818 units, reflecting a modest 0.6% monthly increase, while posting a notable 20.1% y/y rise. However, it’s worth noting that the 20.1% annual increase recorded in February marked the weakest y/y growth since August. Moreover, mortgage-backed home sales totaled 16,778 units, recording a 0.3% monthly rise, while the annual surge of 90% underscored continued strong growth. Mortgage sales have exhibited significant annual increases since September. Analyzing housing loan interest rates, the average mortgage rate, which stood at around 42% in 4Q23, showed little change in 4Q24, averaging 41.3%. As of February 2025, the rate remains at approximately 40%. Despite persistently elevated mortgage rates, the sharp annual increase in mortgage-backed sales appears to be largely driven by expectations of a future rise in housing prices, following a period of real-term declines.