KUALA LUMPUR (Sept 8): After three weeks of buying, investors classified as “foreign” sold Malaysian equity in the open market (i.e excluding off-market deals) on Bursa albeit at a smaller amount of RM61.2 million last week, according to MIDF Research.
In his Fund Flow report Monday, MIDF Research head Zulkifli Hamzah said Malaysia was bucking the trend as far as international money flow in equity was concerned.
He said foreign investors bought relatively strongly on Tuesday, after the National Day holiday, and continued buying on Wednesday.
However sellers overwhelmed buyers in the last two days of the week, with the net amount sold having exceeded RM100 million each day.
Zulkifli said that on a cumulative basis, foreign investors remained net sellers of Malaysian stocks in 2014, but the net outflow as of last Friday had increased slightly to RM1.76 billion.
In 2013, Malaysia reported a net inflow of RM3 billion.
He said foreign participation rate turned “elevated” last week, explaining that daily average gross purchase and sale rose to above RM1 billion for the first time in five weeks.
“In contrast, local participation rate is declining. In the retail market, the average daily gross purchase and sale fell below RM1 billion for the first time in six weeks.
“Retailers remained cautious, having offloaded RM132 million, extending the selldown to 21 consecutive weeks.
“Meanwhile, local institutions’ supported the market, albeit moderately, for the second week running, mopping up RM192.9 million last week. Participation decelerated further to RM2.35 billion, from RM2.59 billion the week before,” he said.
Commenting on the region, Zulkifli said that for the fifth consecutive week, Wall Street found reasons to close in the greenzone.
However, he said signs of fatigue in the world’s bellweather equity market remained.
He explained that U.S nonfarm payroll increased by a surprisingly weak 142,000 in August, as unemployment rate fell again to 6.1%.
He said this indicated that the Federal Reserve may not be so hawkish in its monetary policy approach moving forward.
“The biggest development last week is unmistakably the ECB’s unexpected cut of interest rates and its announcement of new stimulus plans. It will unleash liquidity into the global monetary system, with some will likely to land in Malaysia.
“Asian Emerging markets are making a comeback after being in the shadows of Korea and Taiwan recently. China’s market is hot,” he said.
Zulkifli said that for the fourth consecutive week, global funds made a beeline for Asian equity.
“However, the size of liquidity flow to the more developed North Asia dropped significantly. In contrast, money flow to “Emerging” Asia more than tripled.
“Unfortunately, Malaysia appears to be currently bucking trend as far as international money flow in equity is concerned. After three weeks of buying, foreign investors sold Malaysian equity in the open market last week.
“Meanwhile, the market for the second and third liners had not been so appetizing in the past three weeks. But we detect strong bargain hunting on Friday. Expect interesting week ahead for this segment,” he said.