KUALA LUMPUR (May 7): Foreign funds sold RM438.4 million of Malaysian equity last week, compared to a net purchase of RM24.6 million the prior week, according to MIDF Amanah Investment Bank Bhd Research.

In his weekly fund flow report today, MIDF Research’s Adam M Rahim said this was the second highest weekly outflow so far this year.

He said that as a result, the year-to-date inflow stands at RM3.02 billion, making Malaysia the only market with inflows among the four ASEAN markets he tracks so far in 2018.

“It seems that foreign investors are shifting to the sidelines earlier than expected before this year’s election.

“Tracing back to the penultimate week before the 13th general election (GE13), foreign investors snapped up RM750.4 million net of local equities.

“Foreign attrition was only seen on the last trading day before GE13 which only amounted to RM91.7 million net,” he said.

Adam said Monday’s heavy of inflow of RM249.1 million net was offset by three straight days of outflows after the Labour Day break with Wednesday recording the highest daily outflow since early February 2018, totalling up to RM291.7 million net.

“We reckon that risk-on sentiment was hampered during this period due to: (i) GE14 fever, (ii) US-China trade talks, and (iii) the Fed’s acknowledgement of inflation nearing its target without any hints to steer away from gradually tightening its policy.

“In the week ahead, the FBM KLCI will probably stage a relief rally on Thursday after GE13 reflected by an influx of foreign inflows,assuming the federal ruling incumbent retains its position,” he said.

Adam said foreign inflows mopped up RM1.43 billion worth of local equities during GE13.

He said foreign participation remained solid as the average daily trade value (ADTV) reached RM1.29 billion, the highest in  seven weeks.

Adam said local institutional funds took the opportunity, given the presence of foreign sellers, to buy stocks which resulted in the second highest weekly net buying so far in 2018 of RM605.4 million net with the local institutional ADTV reaching RM2.32 billion, a fairly healthy level.