KUALA LUMPUR (Dec 7): Foreign investors withdrew RM615.4 million net of local equities from Monday to Friday last week, compared to RM86.6 million sold in the whole of the preceding week.

In a note today, Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said Monday wreaked havoc as international investors dumped RM541 million net of local equities, the highest daily foreign net outflow since May 2018, following the latest rebalancing exercise of the MSCI index.

As such, the month of November saw RM1.1 billion worth of foreign net outflows, marking the 17th consecutive of foreign net selling on Bursa.

“Nevertheless, the first trading day of December started on a positive note as foreign investors took the opportunity to do some bargain hunting on Tuesday after Monday’s selldown, resulting in a foreign net inflow of RM66 million.

“Another catalyst for Tuesday’s foreign net buying activity was China's factory activity, which accelerated at the fastest pace in a decade in November, helping factories across the region to steadily recover from the Covid-19 crisis,” he said.

Adam said a measurable pace of foreign net selling was then observed at a tune of RM36.4 million on Wednesday.

He said sentiment on Wednesday was somewhat dampened following the release the IHS Markit Manufacturing Purchasing Managers’ Index (PMI), a composite single-figure indicator of manufacturing performance which dipped fractionally for the fifth month in a row, down from 48.5 in October to 48.4 in November.

He said this reading signalled a further moderation in the health of the manufacturing sector, although the trend appeared to be flattening, while the deterioration was considerably less marked than that seen during the first wave of the Covid-19 pandemic.

“International investors staged a return on Thursday by acquiring RM41.4 million net of local equities as investors took their cue from Britain’s approval of Pfizer’s Covid-19 vaccine to be rolled out this week (last week).

“Meanwhile, the Bursa Malaysia Energy Index gained the most by 4.4% among other sectoral indices on Thursday ahead of OPEC's meeting to make a final decision on future volume of oil production cuts following days of deadlocked talks,” he said.

Adam said Friday saw international investors ramping up their net selling activity to a level above RM100 million at RM145.4 million amid jitters coming from political turbulence in Perak.

“Aside from that, OPEC decided to increase production by 500,000 million barrels per day beginning in January 2021.

“Nevertheless, the Bursa Malaysia Energy Index gained the most by 7.5% today (Friday) as the 500,000 million barrels-per-day increase only represents 1% of the global oil market,” he said.

Adam said on a year-to-date (YTD) basis, foreign investors had taken out RM24.1 billion net of local equities in 2020.

“In terms of participation of foreign investors, the average daily trading value from Monday to Friday surged to RM2.6 billion mainly due to rebalancing of the MSCI index.

“Among Asean peers, Malaysia remained as the nation with the second largest YTD foreign outflow after Thailand,” he said.