This article first appeared in The Edge Financial Daily on August 21, 2018

KUALA LUMPUR: Global portfolio money left Bursa Malaysia last week after two weeks of foreign buying, with international funds offloading RM631.4 million net of local equities.

MIDF Research said this wiped out the foreign net inflow of RM458.2 million recorded the week before.

In his weekly fund flow report yesterday, the research firm’s analyst Adam M Rahim said August had so far seen a foreign net outflow worth RM128.6 million.

“The year-to-date outflow from Malaysia stood at RM8.6 billion as of last Friday, but [Malaysia] is still the nation with the second lowest outflow among the four Asean markets MIDF Research monitors,” he added.

Adam said offshore investors sold RM142.3 million net last Monday as the crisis in Turkey rippled across emerging markets, including Malaysia. Local stocks with exposure to Turkey, such as Malaysia Airports Holdings Bhd and IHH Healthcare Bhd, were the major decliners that day, with losses of more than 5%, he noted.

“The level of foreign net attrition later slowly tapered [off] last Tuesday and Wednesday to RM127.1 million and RM85.4 million respectively, as the Turkish lira rebounded from last Monday’s massive drop. The FBM KLCI even followed suit to advance on these two days, while other regional markets such as Thailand and Hong Kong were in the red zone during the same period.

“However, foreign net selling activity gradually accelerated last Thursday and Friday to RM127.9 million and RM148.7 million respectively as news of China and the US holding trade discussions in late August was not sufficient to spur risk-on mood following the announcement of Malaysia’s lower-than-expected second quarter of 2018 (2Q18) gross domestic product (GDP) growth of 4.5% year-on-year (y-o-y) against market expectations of 5.2% y-o-y,” said Adam.

Participation of foreign investors have been active so far this year as their weekly average daily trading value (ADTV) has been above RM1 billion for 31 out of 33 weeks. The weekly ADTVs of the retail market and local institutional funds also remained healthy at above RM800 million and RM2 billion respectively despite the drop last week.

Globally, Adam said, most equity markets had retreated into the red zone as investors digested the latest developments regarding Turkey, and the trade feud between the US and China.

“The three-week foreign buying streak in Asian markets was snapped as international investors shifted back into selling mode. Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ dumped US$1.4 billion (RM5.74 billion) net last week, wiping out the net inflow recorded in the week before,” he added.