KUALA LUMPUR (Jan 26): While foreigners’ net selling of RM833.6 million last week was the highest in 17 weeks, MIDF Research deems the amount as “under control”, given the continued heavy outflow from Asia last week.
In its weekly fund flow report today, MIDF Research said foreign funds’ selling activity was relatively aggressive in the first four days of last week. The net amount of shares sold was over RM200 million, although below RM300 million, on Monday, Wednesday and Thursday.
“The fact that the daily attrition did not exceed RM300 million indicates the low overhang of foreign liquidity in the system, which we estimate to be only in the region of RM6 billion, compared with an estimated RM50 billion in the aftermath of the (13th) general election,” the research outfit said.
Compared with last year, there were 19 days which saw foreigners’ selling at a net of more than RM300 million.
Up to Jan 22 (last Friday), foreign investors have sold a net of RM2.21 billion this year. This compared with the RM19.5 billion net outflow for the whole of last year.
The research house said foreign investors’ average daily transaction came down last week to RM876 million, from RM990 million the week prior.
Even last Friday, where the FBM KLCI gained 1.52%, foreigners’ participation rate was at RM785 million, far lower than the average daily participation rate of RM1.05 billion in 2015.
“Local investors took the opportunity of a rally on Friday to offload some position,” MIDF Research said, although it noted that as a whole, local institutions mopped up a net of RM820.8 million last week; while retail investors, RM12.8 million.
“The participation rate of local institutions rose to RM2.16 billion, but retail activity was surprisingly subdued, with trade averaging RM827 million — the lowest in three weeks. Indeed on Friday, volume fell to RM680 million, the lowest this year.”
Meanwhile, Asian markets were under foreign selling pressure for the third week running, said MIDF Research.
In total, the seven Asian stock markets monitored by the research house saw net selling amounting to US$2.84 billion last week.
Apart from Malaysia, the markets included those in Indonesia, Thailand, Philippines, Taiwan, India and South Korea.
“There was a massive outflow from South Korea last week. Foreigners dumped US$1.05 billion of Korean equity, only the fourth time since the first week of 2014 that the weekly outflow amount had exceeded US$1 billion. The market was hit by news that Barclays plc will exit South Korea and Taiwan entirely,” said MIDF Research.
MIDF Research also noted that the ringgit was the biggest gainer among Asian currencies last Friday, up 2.07% against the US dollar. This was also its biggest one-day gain against the greenback since June 21, 2010.
“The ringgit was clearly buoyed by Bank Negara Malaysia’s decision to reduce the statutory reserve ratio, which we estimate will release RM6.2 billion into the banking system,” MIDF Research commented.