This article first appeared in The Edge Financial Daily on October 16, 2018

KUALA LUMPUR: Offshore funds fled Bursa Malaysia at a rather heightened pace last week, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research analyst Adam M Rahim said foreign funds withdrew RM1.05 billion net of local equities in the trading week ended last Friday, the largest weekly foreign net outflow in 16 weeks.

“The total foreign net outflow from Malaysia as of last Friday stood higher at RM9.7 billion, offsetting approximately more than 90% of last year’s RM10.3 billion foreign net inflow.

“Nevertheless, Malaysia still retains its position as the nation with the second lowest year-to-date foreign net outflow among the four Asean markets we track,” he said.

Last week, Adam noted, international investors were net sellers on every single day of the week.

“[Last] Monday’s foreign net selling of RM227.2 million was of no surprise as investors reacted towards Sunday’s (Oct 7) announcement of the termination of MMC-Gamuda’s underground work contract for the mass rapid transit Line 2 (MRT2) project.

“The level of foreign net selling then tapered [off] to go below RM200 million on the next two days, [last] Tuesday and Wednesday, supported by hopes that the international retendering process of the MRT2 underground works would be reviewed by the government,” he said.

“However, [last] Thursday saw chaos as international investors sold RM327.9 million net, the highest in a month after Wall Street suffered its biggest loss in eight months overnight as technology companies remained a drag, combined with worries about increasing interest rates.

“Foreign net selling then almost halved to RM173.8 million [last] Friday in tandem with the rebound of the local bourse by 1.3% following news that US President Donald Trump could meet his Chinese counterpart Xi Jinping during the next G20 (Group of Twenty) summit,” he added.

Meanwhile, participation of foreign investors, local institutional funds and investors in the retail market was strong last week as their weekly average daily trading value was higher by more than 20% compared with the preceding week.

Regionally, international funds in Asia continued to dump equities for the third week, said Adam.

“Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as foreign sold US$4.34 billion (RM18.05 billion) net last week, only US$5 million more compared with the week before,” he added.

In the four emerging Southeast Asian markets comprising Malaysia, Indonesia, the Philippines and Thailand, foreign net selling was seen across the board.