KUALA LUMPUR: Foreign investors bought RM460 million in equities on Bursa Malaysia last week, the fifth highest in a week this year, compared with RM351 million sold the week before, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said for Malaysia, foreign money flow had been erratic this year.

He said the frequency of the cycle had been higher than that of its Asian counterparts.

Zulkifli explained there had been a pronounced down cycle or money outflow in September and in the first three weeks of October.

“However, the tide appears to be reversing, based on the numbers last week,” he said.

Zulkifli said foreign investors were net sellers last Monday, but turned strong buyers for the rest of the week.

He said buying peaked last Wednesday when foreign funds mopped up RM202.3 million and net purchases exceeded RM200 million for only 15 days this year.

Zulkifli said that in October, foreign funds sold RM493.3 million, which were significantly lower than the RM1.49 billion offloaded in September.

He said for the year until October, the outflow of foreign funds had amounted to RM3.69 billion, reversing the RM3.03 billion inflow last year.

Zulkifli said foreign participation had eased slightly after three weeks of “elevated” (more than RM1 billion) volume.

He said the daily average gross purchases and sales fell below RM1 billion to RM967 million.

“Local investors cleared positions, taking advantage of foreign entry. Retail investors sold RM107.9 million while local institutions offloaded RM352.1 million respectively.

“Institutional participation rate bounced back to above RM2 billion at RM2.3 billion, while retail participation climbed slightly to RM867 million. However, we note that retail participation surged to RM1.2 billion on Friday, the highest since Aug 21,” Zulkifli said.

Zulkifli said the world’s equity markets “exploded” in the last week of October in the region, with many bourses recording their best weekly gains for the year.

He said until last Thursday, the main focus for the week was the US Federal Reserve’s (Fed) Federal Open Market Committee meeting last Wednesday.

Last Friday, the Bank of Japan (BoJ) surprised by upsizing its monetary stimulus.

Zulkifli said the market received a double boost when the Government Pension Investment Fund officially confirmed that it will double its investment in shares.

“It is apparent that Abenomics is stealing the show and sparking a rally in global equity.

“The BoJ’s announcement could be a game changer for global equity in this short term. It partly neutralises the risks of a ‘hollowing out’ effect caused by the expiry of the Fed’s third round of quantitative easing,” he said.

Zulkifli said crude oil prices had dropped again last week, but equity prices had absorbed the decline well, in contrast to the near hysterical response a few weeks ago.

This article first appeared in The Edge Financial Daily, on November 4, 2014.