KUALA LUMPUR (Nov 22): Foreign shareholdings of Malaysian equities fell 0.1 percentage point (pps) month-on-month (m-o-m) to 20.5% as at end-Oct 2022 (versus 20.2% as at end-Oct 2021), according to CGS-CIMB Securities.

In a strategy note on Monday (Nov 21), the research firm said the declining trend in foreign shareholdings started in May 2018, specifically after the 14th General Elections (GE14) on 9 May 2018, when Pakatan Harapan (PH) won a simple majority in Parliament, heralding the first change in government in Malaysia's history.

It said since then, the foreign shareholding level has fallen 4.1 pps from its peak of 24.2% in Mar 2018 to a trough of 20.1% in Aug 2022 due to political uncertainty.

“As of end-Oct 2022, foreign shareholdings stood at 20.5%.

“Year-to-date as of Nov 18, 2022, foreign investors have net bought RM5.9 billion of Malaysian equities (against a net sell of RM3.2 billion in 2021),” it said.

CGS-CIMB said the FBM KLCI fell 1.3% week-on-week ahead of the Election Day on Nov 19 – which led to Malaysia’s first hung Parliament.

It said retail investors turned largest net buyers from net sellers, net buying Dagang NeXchange Bhd and Hartalega Holdings Bhd.

It said local institutional investors were the second largest net buyers, adding that they net bought Petronas Chemicals Group Bhd (Petchem) and RHB Bank Bhd.

“Foreign investors turned largest net sellers last week. They net sold Petchem and RHB Bank.

“Healthcare, financial services and telco were the top short sectors last week.

“We expect the market to react negatively to GE15 results, which have led to a hung Parliament,” it said.