This article first appeared in The Edge Financial Daily on November 21, 2017
KUALA LUMPUR: Foreign selling returned to Bursa Malaysia at a rather intensified level last week, with international investors dumping RM297.1 million net of Malaysian equities on the open market — the highest weekly attrition recorded in seven weeks.
This compared with the amount disposed of in each of the previous six weeks that did not exceed RM100 million net, said MIDF Research.
“Foreign buyers exactly matched foreign sellers on Monday. A bout of acquisition then took place on Tuesday, when foreign investors bought RM181.3 million net, the highest net inflow in a day in almost five months despite the weak China industrial output data that coincided with the 0.22% dip in the FBM KLCI,” said the research firm in its weekly fund flow report yesterday.
However, it noted that foreign investors were back in selling mode thereafter until the week ended last Thursday, recording the highest amount sold at US$282.1 million (RM1.17 billion) net.
“The heavy foreign buying on Thursday saw the [FBM] KLCI close at an eight-month low of 1,718 points ahead of the US House of Representatives’ vote for a tax cut bill,” said MIDF Research.
It added that market sentiment improved last Friday, following strong third-quarter gross domestic product growth, which climbed 6.2% year-on-year, that saw a 0.21% rebound in the FBM KLCI.
“Foreign selling still occurred on the same day, but at a reduced level below RM100 million net,” said MIDF Research.
It pointed out that the cumulative year-to-date (YTD) inflow substantially decreased to RM9 billion from RM9.31 billion in the week before. Nonetheless, the YTD inflow still offset 31% of the total net outflow from 2014 to 2016.
MIDF Research said foreign participation was back on its feet as the foreign average daily trade value (ADTV) surged by 27% to RM1.13 billion after three weeks of staying below the RM1 billion mark.
In contrast, the retail ADTV decreased by 8% to settle below the RM1 billion level at RM957 million, it added.