KUALA LUMPUR: Foreign selling of Malaysian equity appears to be ebbing after heavy outflow three weeks in a row, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said, however, foreign investors have been net sellers on Bursa Malaysia for eight consecutive weeks.

He said last week, foreign investors sold equity listed on Bursa amounting to RM372.4 million on a net basis. He said this was a significant drop from the RM852.7 million sold the week before.

Zulkifli said the decline in the intensity of selling was reflected by the fact that foreign investors turned net buyers last Wednesday.

“Although the amount was marginal at only RM14 million, it was the first buying in 22 trading days.

“Nevertheless, it would have been naive to jump to conclusion that the trend is reversing. As it turned out, foreign selling resumed on [last] Thursday and on [last] Friday; the withdrawal surged to RM196.2 million, the highest in six trading days,” he said.

Zulkifli noted that however, daily selling had been capped below RM100 million on Monday, Tuesday and Thursday last week.

“This is further evidence that the intensity of selling is ebbing.

“The week ahead is particularly crucial as it remains to be seen whether the momentum of last Friday’s sudden surge in selling will follow through,” he said.

Zulkifli said that last week’s selldown increased the cumulative net foreign outflow in 2015 to RM7.9 billion, surpassing the RM6.9 billion outflow for the entire 2014.

He said foreign participation (daily average gross purchase and sale) rose 21% to RM1.02 billion, but much of it was due to the surge in volume last Friday.

“Local institutions were passive in mopping up only RM315.3 million last week although the participation rate rebounded to RM2.03 billion.

“Retailers were still on the sidelines although opportunists bought RM57 million on still depressed average daily volume of RM621 million,” he said.

On the regional markets, Zulkifli said equity prices around the world closed last week generally lower on volatile trading.

He said an important turning point last week was the easing of the US Federal Reserve Open Market Committee’s hawkish monetary policy stance

Zulkilfli said focus was also on Greece which is struggling to stay afloat after June 30, when the current bailout programme expires.

“The biggest mover last week was easily the China market, which finally succumbed to selling pressure after defiantly bucking the trend. The CSI300 Index fell 13.1% last week, the steepest decline since October 2008.

“Foreign money continued to flee Asian equity at a significant pace last week. Focus appears to be shifting towards North Asia.

“Although selling continued in most emerging markets, the brunt of the current phase of equity selldown is likely to be in the past,” he said.

This article first appeared in The Edge Financial Daily, on June 23, 2015.