Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 5): After a heavy tide out the week before, the outflow of foreign fund from the local equity market reverted to its “normal” pace last week, according to MIDF Research.

In his weekly fund flow today, MIDF Research head Zulkifli Hamzah said the heavy swings in the movement of funds in the last two weeks proved to be a transient phenomenon.

He said investors classified as “foreign” remained net sellers on Bursa last week and that foreign funds offloaded RM598.7 million net in the open market (i.e excluding offmarket deals), a sharp decline from the RM1.27 billion outflow the week before.

Zulkifli said foreign funds were net sellers every single day last week.

He said selling was relatively heavy on Monday and Thursday, reflecting spillover of negativities from the previous week’s global paranoia and apprehensions over emerging markets as a whole.

“For 2015, last week’s attrition raised the cumulative net foreign outflow to RM18.3 billion, almost three times the RM6.9 billion outflow for the entire 2014.
 
“More importantly, we believe the overhang of foreign liquidity in the market is now at its lowest since the Financial Crisis of 2007.
 
“We estimate the size of the overhang to have dropped to that below RM10 billion for the first time last week, for funds which came in since early 2010,” he said.
 
Zulkifli said foreign participation rate stayed elevated last week.
 
He said the average daily gross volume was RM1.14 billion, picking up from RM1.08 billion the week before.
“Nevertheless, we note that on Tuesday, the volume was only RM1.15 billion although net sale amounted to RM216 million.
 
“Local institutions were passive buyers, mopping up RM539.1 million net on RM2.0 billion participation rate. Average volume had surpassed the RM2 billion mark in the last 8 eight consecutive weeks,” he said.
 
Meanwhile, Zulkifli said retailers remained net buyers, purchasing RM59.6 million, after a record haul for 2015 in the preceding week.
 
Nevertheless, he said participation rate eased to RM664 million, indicating falling speculative element in the market.

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