Friday 29 Mar 2024
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KUALA LUMPUR: Foreign investors sold RM27.3 million net of Malaysian equities last week, compared with RM29.7 million the week before. Daily average gross purchase and sale slumped to RM725 million, the lowest in 27 weeks, in the absence of catalysts for funds inflow amid falling oil prices.

The fund flow pattern led MIDF Research head Zukifli Hamzah to conclude that Malaysia is losing is relative attractiveness as an equity market destination.

“There is no current catalyst for funds to enter Malaysia, more so with [a] falling oil price and an impending GST [goods and services tax] in 2015,” he said in his weekly fund flow report yesterday.

“In contrast to what is happening in the rest of Asia, the pattern of foreign money flow in the last two weeks reflects global funds’ blase attitude towards Malaysian equities.

“The reversal of tide which we were hopeful [would happen] after the promising fund flow data in the last week of October has not materialised. However, we believe most of the foreign selling for the year is done,” he said

As at last Friday, foreign investors sold RM3.75 billion of equities in the open market this year, more than the RM3 billion that entered the market in 2013.

He noted that retail investors have been accumulating stocks in the last two weeks, purchasing a net of RM78 million worth of shares, double the RM33 million recorded in the week before.

“Participation rate was depressed at only RM789 million. This reflects opportunistic buying by retail investors, especially those with holding power, as the prices of small-and mid-cap counters have retraced significantly,” he said.

Zulkifli said for the third week running, Asia was a clear beneficiary of global portfolio money attracting a net purchase of US$1.46 billion (RM4.87 billion), with Taiwan emerging as the strongest destination for foreign investors.

He said Taiwan attracted US$817 million, below the US$1.4 billion inflow chalked up  in the last week of October.

“Nevertheless, global money managers’ sentiment towards Taiwan appears to be the strongest currently among Asian nations. Foreigners have bought US$12.8 billion of Taiwan stocks this year, but the Taiwan Stock Exchange (Taiex) is only up 4.3% while still trading at a discount to historical average valuation,” he said.

“That is enticing to investors looking for a proxy of US demand for imported electronics,” he said.

Zulkifli said among emerging Asian markets, Indonesia appeared to be the most alluring last week as international investors mopped up US$260 million of stocks, the highest in 18 weeks.

He said investors were betting on massive investments in infrastructure in Indonesia now that political stability has been restored following President Joko Widodo’s strides to reform the country.

In Thailand, Zulkifli said foreign investors had been net buyers of stocks in November, after selling equities throughout October, while investors were also buying back Philippine stocks.

 

This article first appeared in The Edge Financial Daily, on November 18, 2014.

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