This article first appeared in The Edge Financial Daily on October 19, 2018

KUALA LUMPUR: The selldown in the Malaysian equity market last week was not due to the termination of the mass rapid transit Line 2’s (MRT2) underground work contract with MMC-Gamuda KVMRT (T) Sdn Bhd, according to Finance Minister Lim Guan Eng.

During the Ministers’ Question Time in Parliament yesterday, Guan Eng also said the government will meet rating agencies after presenting its Budget 2019 to promote the Malaysian equity market.

“The selldown by foreign investors last week was not because of one or two companies or one or two projects, that couldn’t be an effect so huge. We all know that global equity markets are affected by the trade war between the US and China and other external factors,” he said.

“Usually, Malaysia is categorised in the same basket as our regional peers, so I suggest we go to all major rating agencies, after [tabling the] budget, to clarify with them about the situation in Malaysia and promote the domestic equity market, and hope it will be more liquid in future,” he added.

Guan Eng was responding to the member of parliament (MP) for Pontian, Datuk Seri Ahmad Maslan, who asked the ministry of finance to give reasons why foreign investors have sold RM1.05 billion in shares in Bursa Malaysia, as reported by the media.

He was also responding to the Jeli MP’s follow-up question on what steps the government will take to promote Malaysia’s equity market.

Earlier this week (Oct 16), The Edge Financial Daily, quoting MIDF Research’s Adam M Rahim, reported that foreign funds withdrew RM1.05 billion from the local equities last week, compared to a net inflow of RM69 million the prior week.

Adam said this was the largest weekly foreign net outflow in 16 weeks.

Nevertheless, he said, Malaysia saw the second lowest level of foreign attrition last week among the four Asean markets he monitors.