KUALA LUMPUR (March 23): Investors classified as foreign bought RM565.5 million worth of Malaysian equity last week, halting two weeks’ of intense selling, according to MIDF Research.

In his weekly fund flow report today, MIDF Research head Zulkifli Hamzah said while the week did not begin on a positive note due to heavy follow-through selling last Monday, foreign funds bought back Malaysian equities last week, even as Fitch Ratings raised the odds that it may downgrade the country’s sovereign rating.

He said it was only the third week this year that foreign investors had been net buyers on Bursa Malaysia.

Zulkifli said international investors were clearly still uncertain whether general bearishness in the global market the week before would persist.

However, he said sentiment began to reverse on Tuesday, as foreigners made a marginal purchase for the first time in 11 trading days, ahead of the FOMC meeting on Wednesday.

Subsequently, he said there was a significant rise in the amount bought on Wednesday and Thursday and by Friday foreign purchases had hit RM348.4 million, the highest this year and the first time it exceeded RM300 million since February 4.

Zulkifli said last week’s purchase reduced the cumulative net foreign outflow for 2015 to RM4.0 billion.

In comparison, he said the cumulative foreign outflow for the entire 2014 was RM6.93 billion.

Zulkiflif in his report said that foreign participation rate (daily average gross purchase and sale) surged to RM1.51 billion last week, a 31% jump from the average for the year until the week before.

Most notably, he said that foreign participation spiked to RM3.35 billion on Friday, the third highest in MIDF Research’s record since it started tracking the statistics in early 2011.

“Despite the school holiday, local institutions were active in market last week, taking advantage of foreign buying to offload RM1.16 billion.

“Participation rate remained elevated at RM2 billion, but was the lowest in four weeks,” he said.

Zulkifli said local institutions had absorbed RM4.40 billion net so far this year, adding that in 2014, they bought RM8.18 billion net.

“In contrast, retailers remained quiet, offloading RM112.9 million on low participation rate of only RM721 million, the lowest since the first week this year.

“These are likely profit-taking trades on that position built in the two weeks prior,” he said.

Commenting on the region, Zulkifli said global equity markets turned around for the better last week.

He said the dollar and the price of crude oil, the two main determinants in the equity market, reversed course

“The liquidity tide to Asia resumed last week after a short pause.

“However, the flow to Asia was glaringly uneven. Korean equity is currently the hottest among the markets that we track,” he said.