KUALA LUMPUR (Oct 12): Foreign selling of local equities on Bursa Malaysia narrowed to RM27.8 million last week, down from a whopping RM543.7 million in the preceding week.

In a note today, Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said that is the second smallest weekly foreign net outflow recorded so far in 2020.

Adam said Bursa started the week on the right foot as international investors snapped up RM34.3 million net of local equities last Monday.

He said the FBM KLCI followed suit to close 0.8% higher at 1,512.4 points on the same day in conformity with other regional markets.

‘Concerns over rising global Covid-19 infections last Monday were overshadowed by US President Donald Trump’s improving health condition which helped to calm investors’ nerves with regard to political uncertainties.

“Tuesday, however, saw foreign investors disposing of RM66.8 million net of local equities, wiping off Monday’s foreign net inflow,” he said.

Adam said profit taking was prevalent in glove makers such as Top Glove Corp Bhd and Hartalega Holdings Bhd which both recorded a 3.1% decline on Tuesday.

“This was despite the regional upbeat mood following reports that there was still potential to reach an agreement with US lawmakers on more coronavirus relief, especially with President Trump said to be leaving the hospital after receiving treatment for Covid-19.

“The mood turned sombre on Wednesday as President Trump ordered a stop to talks on another round of aid for the economy until after the election,” he said.

Adam said as such, international investors dumped RM161.4 million net of local equities, dragging the KLCI 1.3% lower to close below 1,500 points, while other Asian peers such as South Korea and Taiwan were all in the green zone.

“Offshore investors made their way back to Bursa on Thursday, albeit at a measurable level of RM38.6 million net.

“Hopes for stimulus were restored after President Trump said he was ready to sign off on piecemeal measures, including support for individuals, small businesses and airlines. In fact, the S&P 500 climbed on Wednesday to its highest close in over a month after President Trump tweeted his support for the said spending packages,” he said.

Adam said this helped to partially outweigh jitters on the local political front as opposition leader Datuk Seri Anwar Ibrahim had been granted an audience with the Yang di-Pertuan Agong tomorrow.

“International investors upped the ante in buying activity last Friday by acquiring RM127.4 million net of local equities as investors showed cautious optimism that US Congress will reach an agreement on fiscal stimulus measures aimed at part of the economy.

“The local bourse took its cue from foreign net buying to close 0.7% higher at 1,530.4 points, a level not seen in more than two weeks,” he said.

Adam said on a year-to-date (YTD) basis, foreign funds had taken out RM22.3 billion net of local equities from Bursa.

“In comparison with Asian peers, namely South Korea, Taiwan ,Thailand, Indonesia and the Philippines, Malaysia still had the third smallest foreign net outflow on a YTD basis.

“South Korea and Taiwan had the largest YTD foreign net outflows of more than US$20 billion (RM82.76 billion) each.

“In terms of participation, foreign investors remained active on Bursa with a healthy average daily trading value of more than RM1 billion,” he said.