KUALA LUMPUR: Foreign selling of Malaysian equities does not appear to be ebbing, four weeks into the current phase of portfolio outflow, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said foreign investors sold equities listed in the open market on Bursa Malaysia amounting to RM544 million on a net basis last week, compared with RM537.7 million the week before.

He said it was the highest in three weeks, and was also the eighth week this year that the amount had exceeded RM500 million. Foreign investors were net sellers in the last four trading days.

“The RM174.5 million sold last Friday was the highest in eight trading days. It had been consistent selling as opposed to heavy dumping.

“In the last four weeks, foreign investors offloaded RM2.12 billion in the open market. This has increased the cumulative net foreign outflow in 2015 to RM4.75 billion. In comparison, the cumulative [net] foreign outflow for the entire 2014 was RM6.93 billion,” he said.

Zulkifli said foreign participation (daily average gross purchase and sale) on Bursa declined further last week, after dropping below RM1 billion the week before.

He said the average amount traded was only RM840 million last week, the second lowest this year after the Chinese New Year week, which was a truncated 2.5-day trading week.

“Although foreign participation is easing, overall market volume did not decline as local participation propped up market activity.

“Local institutions absorbed RM568.7 million last week, the fourth straight week of purchases during which RM2.3 billion had been mopped up. Average daily trade surged to RM2.37 billion, the highest in five weeks,” he said.

Zulkifli said although average retail volume rose 19% last week to RM763 million, retailers were still net sellers by RM24.7 million.

“However, we believe a significant portion of the selling was still associated with Malakoff Corp Bhd, whose IPO (initial public offering) was listed two Fridays ago,” he said.

On the region, Zulkifli said global equity prices remained resilient in the penultimate week of this month.

He said much of the strength was derived from Wall Street.

Zulkifli said what’s notable last week was the massive 7.2% gain in China’s benchmark CSI300 Index, the biggest weekly gain in nine weeks.

He said the overheating Chinese market is one of Asia’s vulnerable spots, adding that the CSI300 has added 40% this year.

“There was an encouraging pick-up in the amount of Asian equities purchased by global investors last week, but the flow was uneven.

“South Korea was the clear winner last week, and remained one of the most favoured Asian equity markets among global investors.

“The Korean government last week made public its intention of pursuing an upgrade of the MSCI country classification from ‘advanced emerging’ to ‘developed’ status,” he said.

This article first appeared in The Edge Financial Daily, on May 26, 2015.