International investors sold RM1.79b net of local equities last week, says MIDF Research

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KUALA LUMPUR (March 23): International investors sold RM1.79 billion net of local equities from Bursa Malaysia last week, according to MIDF Amanah Investment Bank Bhd Research.

In his weekly fund flow report today, MIDF Research’s Adam M Rahim said that nevertheless, in comparison to its other six Asian peers, Malaysia has the third least foreign net outflow on a year-to-date (YTD) basis.

He said the YTD foreign outflow from Malaysia came to RM7 billion.

“Monday recorded a massive foreign net outflow of RM520.4 million, the largest in a day since June 2018.

“This coincided with local bourse’s 4.8% drop as concerns over the global economic fallout from the coronavirus pandemic outweighed the [US] Federal Reserve’s emergency interest-rate cut by a percentage point,” said Adam.

He said foreign net selling activity remained high at RM383.5 million net on Tuesday with the Restricted Movement Order announced by the Malaysian government the night before.

“The local market also took cue of the 12% plunge in US stocks overnight, the largest drop since 1987 following President [Donald] Trump’s statement that disruption from the Covid-19 may last into summer.

“Earlier optimism over a US stimulus plan to combat impact of the coronavirus faded, prompting a RM321.6 million net sell-off on Wednesday,” he added.

Adam said the momentum of foreign net selling slowed down to RM308.6 million net on Thursday while the local bourse declined to 1,219 points, a level not seen since as regional peers, namely Indonesia and the Philippines, have slashed rates in light of the global pandemic.

“Friday marked the 22nd consecutive day of froreign net selling but saw foreign net attrition reaching below RM300 million to RM260.2 million, coinciding with the Bursa’s 6.9% advance.

“Also on the same day, Bank Negara Malaysia’s 100bps reduction in the statutory reserve requirement came into effect,” said Adam.

He said in terms of participation, the average daily traded value (ADTV) of foreign investors jumped 20.7% to reach RM2.07 billion.

Going forward, retail and local institutional investors recorded a drop in ADTV of not more than 8% during the week.