This article first appeared in The Edge Financial Daily on April 21, 2020

KUALA LUMPUR: Foreign net selling accelerated on Bursa Malaysia last week to RM638.6 million, compared with RM326 million in the preceding week, according to MIDF Amanah Investment Bank Bhd.

This raises the year-to-date (YTD) foreign outflow from Malaysian equities to RM9.1 billion, according to MIDF’s Adam M Rahim in his weekly fund flow report yesterday. In comparison to six other Asian peers that MIDF monitors, Malaysia remains the nation with the third smallest foreign net outflow on a YTD basis.

“The pace of foreign net selling on Monday (April 13) remained steady below RM100 million as foreign investors only sold RM76.8 million of local equities.

“Foreign investors took the opportunity to accumulate some local equities on Tuesday (April 14) to the tune of RM20.3 million amid reports that China’s exports posted a lower-than-expected decline in March 2020, falling by only 6.6% year-on-year (y-o-y) compared with the consensus of a 14% y-o-y drop,” he said.

Last Wednesday saw the local bourse inch higher to settle at 1,387.8 points, he noted, adding that it was the highest close in more than a month following the International Monetary Fund’s latest World Economic Report that Malaysia’s economic growth will be the fastest among Asean-5 countries in 2021.

“Notwithstanding this, foreign investors dumped RM159.5 million of local equities. The local market was instead supported by the purchase of RM241.8 million of local equities by local institutions on Wednesday (April 15),” he said.

The momentum of foreign net selling accelerated further to RM240.1 million last Thursday amid lacklustre trading on Wall Street spurred by the US industrial output which experienced the biggest drop in more than 70 years last month.

“The level of foreign net selling remained high on Friday (April 17) at RM182.5 million despite the positive reports of a Covid-19 drug test done by Gilead Sciences Inc and a plan to reopen the US economy.

“In terms of participation, foreign investors were the only investor group which saw its average daily traded value (ADTV) increase for the week by 5.6% to RM1.03 billion, while retail and institutional investors saw a weekly decline in ADTV by 11.7% and 3.2% respectively,” he said.

Offshore funds also quickened the pace at which they were reducing their exposure to Asian equities last week, he noted. “Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ sold US$1.02 billion (RM4.47 billion) net last week,” he added.