Thursday 28 Mar 2024
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KUALA LUMPUR: Foreign funds had offloaded RM2.8 billion of Malaysian equity year-to-date (YTD) as of last Friday, according to MIDF Research. The research house pointed out that the cumulative foreign outflow for 2014 was RM6.9 billion.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah (pic) said foreign funds sold every single day last week, and the net amount of outflow last Thursday was RM357 million, the third highest in a day this year.However, he said the aversion could be partly attributable to the long break ahead, not only in Malaysia, but most markets in East Asia.

Zulkifli said last week, foreign investors sold, on a net basis, local equity in the open market amounting to RM677.7 million. He said foreign volume was still elevated, adding that foreign participation rate (daily average gross purchase and sale) was RM1.14 billion last week, six weeks in a row that it had exceeded RM1 billion.

However, he added that it was the lowest in five weeks. Zulkifli said local institutions supported the market last week, mopping up RM749 million. He said the participation rate remained strong at RM2.56 billion. He said local institutions had absorbed RM3.1 billion net so far this year.

“In 2014, they bought RM8.2 billion net. Retailers remained cautious and stayed on the sidelines. Retailers sold RM71.2 million last week, the fourth straight week of selling,” he said. “The participation rate remained moderate at RM877.2 million. This is not a healthy condition if one is expecting a pre-New Year rally of the retail stocks,” he said.

Commenting on the region, Zulkifli said that for the most part last week, trading in the equity market had been weighed down by concerns over Greece. However, he said markets roared to life last Friday.

On Wall Street, he said the Dow Jones broke the 18,000-point mark for the first time, while the S&P 500 closed at a record high, the first time in 2015. He said the main catalyst for the market was the European Union’s fourth quarter 2014 (4Q14) gross domestic product growth, which beat expectations. He said that boosted oil prices with the Brent last traded at US$61.52 (RM220) per barrel.

“In Asia, all eyes were on China which staged a strong rebound after three straight weeks of losses. The CSI 300 gained 4.75%, reversing some of the -6.3% YTD loss prior to last week.

“New reform measures announced boosted sentiment ahead of the Lunar New Year holiday.

“Trading in many markets in the region will be suspended for an extended period of time for the New Year. There is an even chance of a pre-New Year rally. A better bet is for a post-festive cheers,” he added.

 

This article first appeared in The Edge Financial Daily, on February 17, 2015.

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