This article first appeared in The Edge Financial Daily on June 11, 2019
KUALA LUMPUR: Notwithstanding the short trading week because of the Hari Raya Aidilfitri holidays last week, offshore funds continued to scoop up stocks listed on Bursa Malaysia for the second week, and at a stronger pace.
Foreign funds mopped up RM350 million of local equities last week, seven times more compared with the paltry RM48.8 million in the prior week, acording to MIDF Amanah Investment Bank Bhd Research.
“The weekly foreign inflow seen in Malaysia was in conformity with the majority of the other six Asian markets we monitor with the exception of South Korea and the Philippines.
“Bursa started off the week on the right foot as international investors acquired RM231.5 million net of local equities last Monday, marking the second day of foreign net inflows above RM200 million,” said MIDF Research’s Adam M Rahim in his weekly fund flow report yesterday.
Adam said the strong momentum of foreign net buying lifted the FBM KLCI by 0.2% to settle at 1,655 points on the same day, the highest close seen since March 22.
Much of the optimism last Monday was due to the recently concluded corporate earnings season, which had a lot of positive surprises, he said.
“Foreign funds still made their way to Bursa last Tuesday, a day before the two-day Hari Raya Aidilfitri holidays, snapping up RM96.8 million net of local stocks.
“As the local bourse reopened from the two-day break last Friday, international funds still acquired local equities, albeit at a slower pace of RM21.8 million net,” he noted.
With last week’s foreign net inflow, the year-to-date foreign net outflow from Malaysia was trimmed to RM4.45 billion from RM4.8 billion in the preceding week, said Adam.
In terms of participation, due to the holiday-shortened week, there was an inevitable drop in all three segments of retail, foreign investors and local institutional funds, he added.
Nevertheless, he noted that the average daily trading value (ADTV) for foreign investors remained healthy at above RM1 billion despite a 54% weekly decline in the ADTV. Only the retail market had a substantially low weekly ADTV of below RM500 million, the lowest so far for the year.
Globally, Adam said most equity markets ended the week mixed as a new batch of global trade tensions spread to Mexico.
The Brent crude oil price, meanwhile, settled 1.9% lower at US$63.29 (RM263.29) per barrel, marking the third straight week of losses, he said, though last week’s drop was the smallest in three weeks as Saudi Arabia and Russia reiterated their commitment to avert a global supply glut.
In Asia, international funds entered the markets here for the second week at a rather similar momentum compared with the prior week.
“Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ accumulated US$619.3 million net last week compared with the US$665 million net bought in the week before,” Adam added.