This article first appeared in The Edge Financial Daily on February 6, 2018

KUALA LUMPUR: Foreign investors acquired RM3.38 billion net worth of Malaysian equities in the month of January this year, eight times more than the RM418.8 million net recorded in the same period last year.

Last week, the inflow of global funds into Bursa Malaysia continued for the sixth uninterrupted week, said MIDF Amanah Investment Bank Bhd (MIDF Research), albeit at a slower pace amid the holiday-shortened week.

“Based on preliminary data from Bursa which excluded off-market deals, international investors acquired RM344.6 million net of local equities last week, less than half of the RM872.6 million net acquired in the preceding week,” MIDF Research analysts Danial Razak and Adam M Rahim wrote in a weekly fund flow report yesterday.

“During the three-day trading week, foreign investors were net buyers on two days.

“Foreign investors bought RM186.8 million net worth of Malaysian equities [last] Monday amid the rally in banking stocks, due to expectations that banks will benefit in terms of interest margins following the OPR (overnight policy rate) hike announced on Jan 26, 2018,” they wrote.

Correspondingly, the FBM KLCI benchmark settled at its highest level in more than three years at 1,870 points that same day.

But profit-taking last Tuesday saw foreign investors selling RM70.6 million net of local equities. “Another triggering factor for [last] Tuesday’s foreign selling was the overnight pullback in Wall Street amid concerns over higher interest rates following the jump in US Treasury yields,” the duo wrote.

Foreign buying clawed back last Friday after a two-day break, with a net inflow of RM228.5 million net, the highest in six trading days.

Participation-wise, foreigners remained active, as indicated by the foreign average daily trade value (ADTV), which stood above RM1 billion for the past five weeks. The ADTV was up 46% to RM1.6 billion last week — the highest since June last year — from RM1.1 billion in the prior week.

Meanwhile, despite a weekly drop of 9% to RM1.3 billion, the retail market continued to remain attractive, MIDF Research noted.

Globally, equity markets were seen turning its back in the fifth week of 2018, with Wall Street marching into the red last week: Overall, last Friday, the Dow Jones Industrial Average fell 4.12%, its worst decline since June 2016. The S&P too staged its worst dip since August 2016 to 2,762.13 points.

The Hang Seng Index also declined by 1.67% after seven weeks of gains, while the FTSE 100 Index in Europe fell to 7,443 points last Friday, its largest weekly drop since April 2017.

In contrast, the FBM KLCI bucked the global declining trend and advanced 0.89% to close at 1,870 points last Friday, logging its 10th uninterrupted week of gains.

Further, foreign funds made an exit in most markets in Asia last week after five straight weeks of inflows and sold some US$2.03 billion (RM7.92 billion) net, almost offsetting the previous week’s inflow of US$2.05 billion, according to aggregated data from seven stock exchanges tracked by the research house.