Foreign investors turn net buyers of Malaysian equities from Sept 7 to 11

KUALA LUMPUR, Sept 14 — After a month of outflow, foreign investors have turned as buyers during the Sept 7-11 period, injecting RM71.2 million net of equities into the local market against RM589.4 million net sold during the whole of the previous week.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim attributed the better fund-flow to improved investors’ confidence over Malaysia’s equity market in light of certainty in the country’s political environment.

“We are going to see the Sabah state election coming ahead this month, which I believe signals a political certainty,” he told Bernama.

International investors began the week by withdrawing RM72.3 million net of local equities last Monday following the slump in China and Hong Kong’s stocks after a US official cautioned that the US was considering adding Hong Kong-listed Semiconductor Manufacturing International Corp to a trade blacklist.

The level of foreign net selling dropped to RM11.5 million on Tuesday despite US President Donald Trump raising the prospect of a decoupling of the country’s economy from mainland China.

The slower momentum of foreign net outflow on Tuesday coincided with the benchmark index FTSE Bursa Malaysia KLCI’s (FBM KLCI) 0.2 per cent gain after a final hour spike helped the index erase earlier losses, pushing the equity gauge below 1,500 amid a confluence of factors, including lower crude oil prices and in anticipation of Bank Negara Malaysia's (BNM) interest rate decision this week.

According to Adam, foreign funds made a return to Bursa Malaysia on Wednesday as they acquired RM58.9 million net of local equities, dodging a tech sell-off on Wall Street overnight.

“Nevertheless, local institutional funds took out RM249.2 million net of local equities on Wednesday amid concerns of a possible delay in the development of the Covid-19 vaccine.

“As such, the local bourse closed below the 1,500 mark at 1,496.7 points on the same day, a level not seen since late June this year,” he said.

The momentum of foreign net buying accelerated to RM94.8 million on Thursday following a rebound of US stocks overnight from a three-day rout with dip buyers pouring into beaten-down tech shares to send the Nasdaq 100 to its best day since April.

However, the FBM KLCI marginally dropped by 0.4 per cent on the same day with a sell-off in glove counters, offsetting BNM’s decision to keep the overnight policy rate unchanged at 1.75 per cent, which is positive for the banking sector in terms of net interest margins.

Adam said foreign net buying activity took a breather on Friday to reach RM1.3 million net as bargain-hunting activity in glove counters was partially dampened by another technology sell-off on Wall Street overnight.

Nevertheless, the local bourse advanced 1.0 per cent to close above 1,500 points on Friday, he said.

On a year-to-date basis, foreign funds have taken out RM20.85 billion net of local equities, exceeding the RM19.49 billion foreign net outflow in 2015.

In comparison with ASEAN peers, namely Thailand, Indonesia and the Philippines, Malaysia has the second largest foreign net outflow after Thailand which registered a year-to-date foreign net outflow of US$8.22 billion.

On a Friday-to-Friday basis, the FBM KLCI ended 11.01 points easier at 1,504.85 compared with 1,515.86 previously. — Bernama