This article first appeared in The Edge Financial Daily on March 26, 2019

KUALA LUMPUR: After five straight weeks of net selling, international funds finally made their way into stocks listed on Bursa Malaysia last week.

According to MIDF Research, the weekly foreign net buying last week has pared the month-to-date foreign net outflow in March to RM1.4 billion.

“Malaysia’s year-to-date (YTD) foreign net outflow of RM1.19 billion or US$292.7 million is no longer the highest among the four Asean markets we monitor as Thailand took the spot with a YTD foreign net outflow of US$349.4 million or above RM1.4 billion,” its analyst Adam Mohamed Rahim said in his weekly fund flow report yesterday.

He said based on Bursa data, foreign funds acquired RM86.3 million net of local equities for the week ended March 22 — the second-lowest weekly foreign net inflow recorded so far this year.

• Bursa started the week on a strong note as foreign investors bought RM81.5 million net, the largest in a day since Feb 18. The influx of foreign funds last Monday lifted the FBM KLCI by 0.6% to its highest close in 10 trading days at 1,691 points.

“International funds continued entering the Malaysian market to a tune of RM20.6m net [last] Tuesday coinciding with Brent crude oil price consistently remaining near the US$67 per barrel level following Opec’s commitment to resume output cuts 2019,” said Adam.

• However, global funds shifted to the sidelines last Wednesday ahead of the US Federal Reserve (Fed) meeting, resulting in a foreign net outflow of RM26.6 million, he noted.

Another concern which surrounded markets last Wednesday was the possible pushback of China against US’ demands even as US President Donald Trump cited that talks were going well.

• Notwithstanding this, Malaysia attracted foreign net inflows worth RM14.6 million last Thursday as the Fed implied that it would halt interest-rate increases this year and pivot away from policy tightening. The ringgit followed suit to appreciate by 0.12% to an eight-month high of 4.061 to the US dollar — the strongest since late July last year.

• A measurable pace of foreign net selling was seen last Friday worth RM3.9 million following Malaysia’s consumer price index which contracted by 0.4% year-on-year for the second month in February, continuing a deflationary trend,” said Adam.

Regionally, Adam pointed out that international funds entered Asian markets at a rapid pace last week.

“Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ accumulated US$2.32 billion net last week — the highest weekly foreign net inflow in four weeks,” he said.

“In emerging Southeast Asian markets that we monitor, more than half experienced foreign net selling,” he added.