Foreign outflow in August shrank to RM97.4m — MIDF

This article first appeared in The Edge Financial Daily, on September 4, 2018.
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KUALA LUMPUR: Foreign investors sold RM15.3 million of local equities last week, versus an inflow of RM46.5 million in the prior week, according to MIDF Amanah Investment Bank Bhd Research (MIDF Research). In his weekly fund flow report released yesterday, MIDF Research’s Adam M Rahim said the disposal last week was the lowest weekly foreign net outflow recorded so far in 2018.

He said offshore investors accumulated a decent amount of local equities to RM23.2 million net and RM34.8 million net last Monday and Tuesday respectively.  “The mood on [last] Monday was upheld by the US Federal Reserve's comments citing ongoing plans to increase interest rates. The risk appetite was further bolstered the next day following the preliminary agreement reached between the US and Mexico on replacing Nafta (North American Free Trade Agreement). The local bourse (Bursa Malaysia) tracked the gains on Wall Street to jump 0.84% to 1,826.9 points on [last] Tuesday, a level not seen since late-May this year.”

Adam, however, said investors fled Bursa on a large scale of RM121.6 million net last Wednesday, the highest daily outflow in six trading days as investors booked in profits and took cues from a muted trading overnight on Wall Street. He said foreign funds, nevertheless, snapped up RM48.3 million net in conformity with Asian peers — South Korea, Taiwan and Indonesia, tracking the rally in technology shares in US markets.

Adam said total foreign net outflow in August shrank to just RM97.4 million, compared with RM1.6 billion in July. He said this marks the fourth consecutive month of gradual decline in foreign selling since May this year. “The year-to-date outflow from Malaysia was still at RM8.6 billion as of last Friday, the second-lowest outflow among the four Asean markets that we monitor. Despite the holiday-shortened week, foreign investors remained active as their weekly average daily traded value (ADTV) was 7.7% higher at RM1.24 billion, above RM1 billion for the seventh week running.”

The retail market and local institutional funds were equally positive as their ADTVs rose 2.6% and 11.2% respectively, he said. Adam also said most global equity markets saw gains last week following a positive development in international trade.

He said despite US President Donald Trump's threat to impose tariffs on US$200 billion (RM826 billion) worth of Chinese goods, all three major US benchmarks gained above 0.5% for the week as trade negotiations between the US and Canada are set to resume tomorrow after no deal was reached at last Friday’s meeting. “International investors continued to increase their exposure in Asian markets at a higher pace last week. Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as 'foreign' snapped up US$2.31 billion net last week.”