This article first appeared in The Edge Financial Daily on May 23, 2019

KUALA LUMPUR: Bursa Malaysia saw an exodus of foreign funds in the week ended May 17, which extended the foreign net selling streak into the eighth week.

According to MIDF Research’s Adam M Rahim in his weekly fund flow report released on Tuesday, data from Bursa show that foreign funds sold RM1.18 billion net of local equities last week, a level not seen since October last year.

On a month-to-date basis, Malaysia has recorded a foreign net outflow of RM1.71 billion in May 2019, bringing the year-to-date (YTD) foreign net outflow from Malaysia to RM4.46 billion.

The week started on a rough note for Bursa, with global investors selling RM288.6 million net last Monday, followed by RM253.1 million net the next day as China announced retaliatory tariffs on about US$60 billion (RM251.4 billion) US goods, effective June 1, Adam said.

“The escalation of the trade rift occured even as [US] President [Donald] Trump will be meeting Xi Jinping at the G20 (Group of Twenty) summit in June,” said Adam, referring to the Chinese president. “The local bourse was also adversely impacted, closing below 1,600 points for the first time since September 2015,” he noted.

The foreign net outflow then tapered off to RM91.6 million last Wednesday — the lowest seen in the past week — which coincided with a 0.8% gain for the local bourse.

But last Thursday saw net foreign selling spiking again to RM371.7 million as the trade war angst between the US and China outweighted the positive vibes on the local front, which saw the nation’s gross domestic product growth in the first quarter of the year coming in at 4.5%, exceeding expectations, Adam said.

“A slowdown in foreign net outflow occurred on [last] Friday as the amount sold went below RM200 million. Sentiment was revived partly due to the rise in US equities overnight after solid corporate earnings of companies such as Walmart and better-than-expected April housing data,” he said.

Participation among foreign investors gained momentum last week as the average daily traded value rose 2.7% to RM1.21 billion, “which is a healthy level”, he added.

In Asia, Adam noted, foreign investors continued to exit equities. Based on the provisional aggregate data for the seven Asian exchanges that MIDF Research tracks, investors classified as “foreign” sold US$4.11 billion net last week, also a level not seen since October last year.

Taiwan continued to see the biggest foreign net outflow in the region for the second straight week as foreign investors dumped US$1.29 billion.

In emerging Southeast Asian markets that MIDF Research monitors, all markets were experiencing foreign net outflows. While Bangkok recorded foreign net selling of local equities amounting to US$240.1 million last week, Indonesia recorded a net outflow of US$251 million.

Globally, most equity markets worldwide remained in the red last week as the trade rift between the US and China escalated further, Adam added.