This article first appeared in The Edge Financial Daily on February 26, 2019

KUALA LUMPUR: Foreign selling of Malaysian equity on Bursa Malaysia narrowed to RM319 million last week from RM369.2 million in the prior week, according to MIDF Amanah Investment Bank Bhd Research (MIDF Research).

In his weekly fund flow report yesterday, MIDF Research’s Adam M Rahim said a foreign net inflow of RM118.1 million net was recorded last Monday, the highest inflow during the week amid signs of progress from the US-China trade negotiations.

Global investors then disposed of RM47.7 million net of local equities last Tuesday, while the local bourse rose 0.8% to above the 1,700 mark for the first time since Jan 25, 2019.

“Foreign funds made a modest return, snapping up RM27 million net on (last) Wednesday, coinciding with the FBM KLCI’s biggest daily gain since late-December 2018 of 1.15%. The rally was partly attributable to Wall Street’s modest start to the week, as well as a rising Brent crude oil price above US$66 (RM268.62) per barrel,” he said.

However, foreign net selling of RM116.2 million returned on Bursa last Thursday, and swelled to RM300.2 million last Friday. He said sentiments were mainly affected by Malaysia’s consumer prices declining 0.7% year-on-year in January, the first contraction since 2009.

“With four trading days left in February 2019, foreign investors have so far disposed [of] RM525.1 million net, bringing the year-to-date (YTD) foreign net inflow into Malaysia to RM501.4 million or US$120.4 million.

“Regionally, Malaysia still has the lowest foreign net inflow among the four Asean markets that we monitor, with Indonesia leading with a year-to-date net inflow of US$755.8 million or approximately RM3 billion.”

Meanwhile, participation among all investor groups increased during the week, Adam said. He added that foreign investors recorded the largest weekly advance in average daily traded value (ADTV), increasing 41% to remain above the RM1 billion level.

Globally, Adam said major equity markets recovered from the week before despite softening trade data from Asian markets such as South Korea and Singapore. He said the Brent crude oil price jumped 1.3% for the week to US$67.12 per barrel, a fresh closing high in 2019.

The main catalyst was the optimism on the US-China trade talks, offsetting US crude oil production hitting 12 million barrels per day combined with American crude exports achieving a new record.

In Asia, global funds staged a return last week. “Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ accumulated US$1.98 billion net last week, the sixth weekly foreign net inflow so far in 2019,” he said.