Thursday 28 Mar 2024
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KUALA LUMPUR (March 9): Investors classified as “foreign” sold RM594 million of local equity in the open market last week, the third highest in a week this year, according to MIDF Research.

In his weekly Fund Flow report today, MIDF Research head Zulkifli Hamzah said foreign investors dumped Malaysia-listed equities last week, just as hope was rising that net purchases observed in the week following Chinese New Year could be sustainable.

He said there was a follow-through foreign buying on Monday, after the big purchase recorded on the preceding Friday.

“However, sentiment reversed thereafter and foreign investors turned net sellers for the rest of the week.

“The selldown was particularly heavy on Thursday and Friday as the amount rose to RM269 million and RM244 million respectively,” he said.

Zulkifli said that so far this year, there had been 8 trading days during which net foreign sale had exceeded RM200 million.

He said in 2014, the corresponding number was 23 days.

Zulkifli said that last week’s sale increased the cumulative net foreign outflow for 2015 to RM3.41 billion.

He said the cumulative foreign outflow for the entire 2014 was RM6.93 billion.

“Foreign participation rate (daily average gross purchase and sale) surged to RM1.29 billion, the highest this year. Daily foreign participation has exceeded RM1 billion nine days in a row now.

“Local institutions supported the market last week, mopping up RM544 million, on participation rate of RM2.32 billion,” he said.

Zulkifli said local institutions had absorbed RM3.72 billion net so far this year.

He said that in 2014, they bought RM8.18 billion net.

Zulkifli said retailers remained on the sideline.

“Although retailers bought RM49.5 million net, the first time in 7 weeks, trading activity was still relatively insignificant at RM799 million, identical to that the week before.

“Expect more opportunistic retail buying this week, if the market came under severe selling pressure,” he said.

Zulkifli added that the ringgit was expected to define the market this week.

“It slid to USD/RM3.65 on Friday, and the prospect does not look good in this immediate term after the latest U.S employment numbers,” he said.

Commenting on the region, Zulkifli said the performances of equity markets around the world remained mixed last week.

He said China announced that it was targetting a growth rate of around 7% in 2015, the lowest target since 2004, set the tone for markets in Asia last week.

He added that the Hang Seng and China CSI indices were the worst hit, falling by more than -2.6%.

“However, Friday’s release of the employment report in the U.S could be a game changer in this short-term. The unemployment rate fell from 5.7% to only 5.5%, the lowest since May 2008. It is now at a level that the Fed is comfortable to raise interest rate.

“These two developments are likely to partly downplay, at least in the short term, the positive effect of the ECB’s QE.

“From March 9, the European Central Bank will be pumping €60 billion (US$66 billion) into the market per month, until September 2016. A significant amount of this liquidity is expected to find its way to Asia,” he said.

 

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