This article first appeared in The Edge Financial Daily, on June 7, 2016.

KUALA LUMPUR: Foreign selling on Bursa continued for the sixth consecutive week, the longest selling streak since last September, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said the net amount offloaded by foreign investors surged to RM1.196 billion from RM709 million in the prior week, marking the highest weekly sell-off since October 2015.

He said this was estimated based on transactions in the open market, which excluded off-market deals.

“Foreigners were net sellers, every day, last week. As of Friday, foreign investors had been selling in 26 out of 28 straight days.

“We note that prior Friday’s foreign buying appeared to be transient. The momentum halted on Monday, with attrition of RM177.4 million.”

“The selling pressure peaked on Tuesday when foreigners dumped RM597 million. It was the second highest daily selling since August 2013, after the RM657.6 million attrition three weeks ago,” he said.

Selling pressure subsided later to RM189.5 million on Wednesday, he said. The pace further slowed to RM128.1 million on Thursday, before foreigners ended the week by selling off RM104 million on Friday.

Zulkifli said last week’s foreign withdrawal further reduced the cumulative net foreign inflow thus far this year into shares listed on Bursa to an estimated RM1.28 billion, down from the prior week’s RM2.48 billion.

“The figure has been on a declining trend for the sixth week,” he said. In retrospect, foreigners had offloaded RM19.5 billion and RM6.9 billion in 2015 and 2014, respectively, he noted.

He said the foreign participation rate surged to a high of RM2.59 billion last week, mostly driven by the staggering RM9.04 billion daily trading on Tuesday, (May 31).

Zulkifli said that it was a common trading pattern historically due to the implementation of the MSCI new weighting the day after.

“Apart from this, trading was also active on Wednesday and Thursday, standing at RM1.05 million and RM1.07 million respectively,” he said.

He said local institutions continued to support the market, mopping up a staggering RM1.196 billion, making it the highest weekly buying since August 28 last year.

Meanwhile, their participation rate — by volume — increased by RM381.9 million from the prior week to RM2.2 billion.

In contrast, he described retail buyers as “a non-player” last week after offloading a negligible amount of RM600,000, while their participation rate edged down to RM535.2 million.

Regionally, Zulkifli said global liquidity continued to flow back to Asia for the second week at an accelerating pace, with the exception of Malaysia.

Based on provisional data from the respective exchanges in Thailand, Indonesia, the Philippines, South Korea, Taiwan, India and Malaysia it tracks, investors classified as “foreign” bought equities that amounted to US$2.21 billion.(RM9.26 billion)

Meanwhile, global equity markets moved sideways last week, he noted, while market risk appetite shrank as no traces of dovishness were found in US Federal Reserve chair Janet Yellen’s speech in the week prior. Sentiment was also hurt by the weak US non-farm payrolls in May, which were the lowest since 2010.

“Brent crude oil price increased by 0.65% to US$49.64 per barrel(pb). The price rally seemed to have met a resistance at US$50 pb.

“The ringgit declined by –1.6% to 4.15 against the greenback. Portfolio outflows were the key driver to the ringgit’s depreciation,” he said, adding that the FBM KLCI declined 0.04% to 636.46 points.