KUALA LUMPUR: Foreign funds have been quietly rebuilding their portfolio of Malaysian equity and foreign investors bought RM203.8 million last week, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said most of the purchases came early in the week.

Last Tuesday, the net purchase amount was RM263.4 million, only the fifth day this year that the RM200 million mark had been exceeded.

He said there was marginal selling last Wednesday and Thursday, but buying resumed last Friday.

Zulkifli said in March, although there was heavy exit in the first two weeks, much of it was reversed subsequently.

“For the month, aggregate net outflow of foreign portfolio capital from the local equity market amounted to only RM539.9 million, compared with RM2.4 billion in January. For the first quarter of 2015, a total of RM3.4 billion of foreign portfolio left Malaysian equities. Including off-market trades, this figure would likely be higher,” he said.

Zulkifli said last week’s purchase reduced the cumulative net foreign outflow for 2015 to RM3.45 billion. In comparison, the cumulative foreign outflow for the whole of 2014 was RM6.93 billion.

He explained that foreign purchases aforementioned had occurred amid a decline in trading activity.

Foreign participation rate (daily average gross purchase and sale) fell to RM917 million last week, the first time it dipped below the RM1 billion mark in six weeks. Foreign participation amounted to RM351 million last Friday, the lowest this year.

“Local institutions held fort last week, offloading only RM37.5 million. Participation rate remained elevated at RM2 billion. Local institutions have absorbed RM4.1 billion net so far this year. In 2014, they mopped up RM8.18 billion net,” he said.

Zulkifli said most of the selling last week was by retailers, who offloaded RM166 million, the second highest in a week this year.

Yet, he said, participation rate remained low at only RM701 million, the lowest since the first week this year.

Zulkifli said equity markets in Asia rebounded last week but those in the West were flat. Weaker-than-expected March payroll numbers in the US diminished the risk of an early interest rate hike by the US Federal Reserve. That is a dampener on the US dollar and may reignite interest in emerging Asia.

“Money flow to Asia has turned erratic based on evidence in the last four weeks. The aggregate numbers do not suggest single-way traffic either way. Country specific factors dominate. The local equity market ended March on a cautious note. A historically promising month turned out to be a disappointment. April hardly started on an auspicious note,” he said.

This article first appeared in The Edge Financial Daily, on April 7, 2015.