Foreign inflow accelerates

This article first appeared in The Edge Financial Daily, on August 14, 2018.
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KUALA LUMPUR: The foreign tide into stocks listed on Bursa Malaysia accelerated last week, marking the second consecutive week of inflows, MIDF Research said.

Based on preliminary data from Bursa, which excluded off-market deals, overseas funds mopped up RM458.2 million net of local equities, higher than the RM348.9 million bought in the week before,” said its analyst Adam M Rahim in his weekly fund flow report yesterday.

The week started off slow as foreign investors chipped in RM3.9 million net last Monday, the lowest daily inflow so far this year. Nonetheless, foreign net buying surged to RM233.4 million and RM229.6 million respectively last Tuesday and Wednesday, as the FBM KLCI posted gains above 0.5% on both days.

“[Last] Wednesday itself was rather a remarkable day as it was the first time the local bourse closed above 1,800 points since late May this year. The upbeat mood was driven by strong corporate earnings in the US, especially within the financial sectors, which lifted the S&P 500 [Index] — to the highest close since late January this year — last Tuesday,” said Adam.

Foreign net buying last Thursday declined to just only RM18.2 million net as investors were more cautious following China’s move to slap 25% duties on an additional US$16 billion (RM65.44 billion) of US goods effective Aug 23, which mirrored levies by the US,” he added.

Adam also noted that the Turkish lira’s plunge to an all-time low last Friday, amid possibilities of Turkey’s economic crisis spreading to other regional markets, which led to a foreign net attrition on Bursa worth RM26.9 million net, snapping its five-day buying streak.

As global investors made a comeback, the year-to-date outflow from Malaysia had been reduced from RM8.45 billion to RM8 billion as of last Friday.

“Malaysia is still the nation with the second lowest outflow among the four Asean markets we monitor,” said Adam.

Despite a 12.4% decline in average daily trading value (ADTV) among foreign Investors, they were still considered active as the ADTV had been above RM1 billion for five straight weeks. ADTVs among retailers and local institutions also remained solid above RM1 billion and RM2 billion respectively.

Regionally, the flow of global money into Asian markets continued for the third uninterrupted week at an accelerated pace, said MIDF Research.

“Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ bought US$553.3 million net last week, slightly less than double the US$339.1 million net acquired in the preceding week,” said Adam.