This article first appeared in The Edge Financial Daily on January 7, 2020

KUALA LUMPUR: Foreign investors sold RM11.14 billion of Malaysian equities last year, a 4.7% decline from the RM11.69 billion seen in 2018, according to MIDF Research.

“While the total foreign net outflow from Malaysia was little changed in 2019 and remained the largest among the Asean markets we monitor, it was no match for the massive foreign net selling of RM19.49 billion seen in 2015,” the research firm’s analyst Adam Mohamed Rahim wrote in his weekly fund flow report yesterday.

Nevertheless, he pointed out that Bursa Malaysia has so far seen international investors entering for the past three weeks.

Foreign investors snapped up RM28.6 million net of local equities last week, compared with RM69.9 million net bought in the week before.

“It was a good start of the week for Bursa (during the holiday-shortened week ended Jan 3) as foreign funds snapped up RM42.9 million net of local equities on Monday. The local stock barometer even rose 0.3% to close at 1,615.7 points on the same day, a level not seen in nearly five months,” he said.

“The last trading day of 2019 then saw an exodus of foreign funds amounting to RM196.2 million net, dragging the local bourse by 1.7% to settle below the 1,600 mark at 1,588.8 points despite US President Donald Trump agreeing to sign a trade deal with China on Jan 15, 2020.

“As markets reopened on Thursday after the New Year break, international funds made a decent return to Bursa, acquiring RM14.9 million net of local equities.

Offshore investors may have taken cue of Malaysia’s Manufacturing Purchasing Manager’s Index, which edged up to 50 in December 2019, the first expansion since September 2018,” he added.

“International funds later upped the ante in buying activity to purchase RM167 million net of local equities on Friday, the largest daily foreign net inflow in more than two months. The local bourse followed suit to gain 0.6% higher to close at 1,611.4 points on the same day.”

In terms of participation last week, Adam said it was no surprise that foreign investors experienced the largest gain in average daily traded value among the other investor groups, increasing 59.6% but was still below the RM1 billion mark.

Globally, major equity markets ended mixed last week amid the fresh geopolitical turmoil coming from the Middle East. For Asian markets, it was a disappointing week as international funds turned net sellers after three consecutive weeks of acquiring equities, said Adam.

“Based on the provisional aggregate data for the seven Asian exchanges, investors classified as ‘foreign’ took out US$741.9 million net last week, compared with US$824.5 million net bought in the preceding week,” he said,  referring to Thailand, Indonesia, the Philippines, South Korea, Taiwan, India and Malaysia.