Thursday 28 Mar 2024
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PETALING JAYA (Nov 17): Foreign investors sold RM27.3 million net of Malaysian equities last week (RM29.7 million the week before) as 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 Zukifli Hamzah, MIDF Research head, 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 falling oil price and an impending GST in 2015,” he said in the MIDF weekly fund flow report today.

“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 equity.

“The reversal of tide which we were hopeful of happening 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

Zukifli said as of last Friday, foreign investors sold RM3.75 billion of equity in the open market this year, more than the RM3 billion that entered the market in 2013.

He noted that retail investors had 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 added.

Zulkifli said for the third week running, Asia was a clear beneficiary of global portfolio money attracting a net purchase of US41.46 billion (RM4.88 billion), with Taiwan emerging as the strongest destination for foreign investors.

He said Taiwan attracted US$817 million (RM2.7 billion), below the US$1.4 billion (RM4.68 billion) inflow chalked 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 bilion (RM42.78 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 U.S demand for imported electronics,” he added.

Zulkifli said among emerging Asian markets, Indonesia appeared to be the most alluring last week as international investors mopped up US$260 million (RM869 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 stock in November, after selling equity throughout October, while investors were also buying back Philippine stocks.

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