This article first appeared in The Edge Financial Daily on March 5, 2019

KUALA LUMPUR: Foreign funds remained net sellers on Bursa Malaysia for the third week running last week — disposing of RM447.7 million net of local equities.

According to MIDF Research, the amount is the largest in nine weeks.

“For February 2019, international investors dumped RM815.6 million net. This brings the year-to-date foreign net inflow into Malaysia to RM53.3 million or US$10.4 million,” said MIDF Research analyst Adam Mohamed Rahim in his weekly fund flow report yesterday.

Regionally, he said, Malaysia remains as the nation with the lowest foreign net inflow among the four Asean markets the research firm monitors, with Indonesia taking the lead with a year-to-date net inflow of US$690.9 million or RM2.8 billion.

“(For the week ended March 1,) the local bourse gained 0.2% on Monday to settle at 1,725 points as US President Donald Trump said he will extend the deadline to raise tariffs on Chinese goods beyond last week as progress was made between the two nations,” said Adam.

Nonetheless, Adam said, foreign investors sold RM49.6 million net on Monday as the decline in consumer prices in January for the first time in a decade remained in investors’ minds.

On Tuesday and Wednesday, Adam noted that the level of foreign net selling tapered to below RM20 million at RM14.7 million.

“The reduction of foreign net selling occurred despite the geopolitical tension between India and Pakistan,” he said.

Adam said foreign net selling then peaked on Thursday at RM211.6 million, the highest in a day so far in 2019 following the failure of the Trump-Kim summit in Hanoi.

“Friday’s foreign net selling was still high at RM157.2 million net as the changes for the MSCI index came into effect, causing foreign funds to rebalance their portfolios in anticipation of the increased weighting of China,” he said.

Adam also noted that the participation among the three investor groups remained healthy.

“However, only foreign investors saw a 0.6% increase in terms of average daily traded value (ADTV) last week, while local institutions and retail investors experienced a drop of more than 4% in their ADTVs,” he said.

In Asia, offshore investors continued to make their way into Asian equity markets for the second week last week, albeit at a slower pace.

“Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ accumulated only US$534 million net last week, compared with the US$3.62 bilion mopped up in the preceding week,” he said.