This article first appeared in The Edge Financial Daily on February 27, 2018

KUALA LUMPUR: Foreign investors entered Malaysia for the second week in a row, but at a heightened pace last week. The net amount acquired by foreign investors last week amounted to RM190.9 million net, said MIDF Research.

“This is a huge improvement from the RM4.5 million bought in the week prior to the long weekend,” it noted in its weekly fund flow report yesterday.

The research firm noted that foreign buying occurred on three out of five of the trading days last week.

“[Last] Monday recorded the highest daily inflow in 10 trading days, amounting to RM164.3 million net, pushing the FBM KLCI by 1.04% to 1,857 points. We reckon that foreign investors were pumped up to start the first day of trading in the Year of the Dog as they were ready to track gains from Wall Street in the preceding week,” said MIDF Research.

“Foreigners continued buying [last] Tuesday but at a measurable pace of RM31.8 million net amid a lack of fresh catalysts as US markets were closed overnight [last] Monday,” it said.

“However, Wall Street’s slump [last] Wednesday spurred by minutes of the US Federal Reserve’s (Fed) January meeting indicating the need to raise rates caused a pullback in Asian markets including Malaysia [last] Thursday. Hence, it was no surprise that foreign investors sold US$30.8 million net that day,” it added.

MIDF Research also pointed to the FBM KLCI’s 0.17% decline last Thursday, noting that it was not as bad as other Southeast Asia peers.

“The KLCI rebounded to end the week at 1,862 points supported by foreign buying totalling RM48.5 million net. We note that sentiment was uplifted [last] Friday after Public Bank Bhd shares hit a record high of RM22.90 following its positive results for the financial year ended Dec 31, 2017 released the day before,” it said.

Meanwhile, MIDF Research said so far in 2018, foreign investors had accumulated RM2.1 billion net of local equities, but a stark contrast from the RM1.3 billion bought in the same period of 2017.

“It is noteworthy that foreigners remain active as the foreign average daily trading value (ADTV) has been above the RM1 billion for eight straight weeks. The retail ADTV meanwhile recovered, increasing by 53% for the week to RM1.0 billion from RM663 million,” it added.