This article first appeared in The Edge Financial Daily on August 8, 2017
KUALA LUMPUR: Foreign investors continued to buy Malaysian equities last week, despite the sell-off seen in some regional peers, notably South Korea and Thailand, according to MIDF Amanah Investment Bank Bhd.
In a note yesterday, its research team said foreign investors acquired RM151.2 million net in the open market — excluding off-market deals — which was half the amount recorded in the prior week.
“There was a bit of unease as international investors were selling at the start of the week. Nonetheless, the outflow was reversed by purchases from Tuesday (last Tuesday) to Thursday (last Thursday),” said MIDF.
Foreign buying peaked last Wednesday, it noted, following optimism on Wall Street, boosted by Apple’s impressive third-quarter earnings.
“For the month of July, cumulative foreign net purchases amounted to RM420.9 million net, the second-lowest monthly inflow for the year. With seven consecutive months of foreign buying, the cumulative year-to-date (YTD) inflow is nearing the RM11 billion mark at RM10.8 billion net,” said MIDF.
The YTD tally so far has also offset approximately one-third of the cumulative outflow from 2014 to 2016, it said.
Participation-wise, foreign was vibrant, it said, with the average daily trade value (ADTV) rising 11% from RM819 million in the prior week to RM895 million, but still hovering under the RM1 billion level for the fifth week running.
“Retail participation was pretty active. Retail ADTV increased by a substantial 37% from just RM648 million to above RM800 million for the first time in six weeks,” it said.
CIMB stocks were the beneficiary of the highest net money inflow of RM9.27 million, it said, though its share price underperformed the benchmark index with a 0.3% loss for the week, indicating a buy-on-weakness stance among some investors.
In contrast, British American Tobacco (M) Bhd saw the largest net money outflow of RM14.56 million, while its shares outperformed the FBM KLCI with a 1.09% gain in the week.
Globally, the majority of equity markets remained rangebound for the third week running.
“The bolstered optimism from Apple’s impressive earnings pushed the Dow [Jones Industrial Average] to extend gains for nine days straight. Despite some profit-taking activity after the rally in technology stocks, the Dow and S&P 500 still gained 1.2% and 0.19% on a weekly basis respectively,” it noted.
In Asia, global funds continued to retreat from equities here last week, it said. “Based on provisional aggregate data from the seven Asian exchanges that we track, investors classified as ‘foreign’ offloaded US$1.41 billion (RM6.03 billion), the highest attrition so far this year,” it said.
South Korea was hit the hardest, with foreigners offloading US$733.1 million net, the second-largest attrition for the year, it noted.
In emerging Southeast Asian markets, it said, the selling was not across the board, as investors targeted selected markets. “Foreign investors in Thailand remained net sellers for the third week. The quantum of attrition gradually increased week by week as foreign funds continued to invest largely in short-term debt securities as they bet on the baht’s further appreciation,” it added.