November poised for further outflows

This article first appeared in The Edge Financial Daily, on November 27, 2018.
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KUALA LUMPUR: International investors resumed selling on Bursa Malaysia last week for the third uninterrupted week. According to MIDF Research analyst Adam M Rahim, foreign funds sold RM52.3 million net of local equities last week, albeit less than half the amount withdrawn in the preceding week.

He said November is poised to be another month of outflows with the month-to-date outflow, as of last Friday, amounting to RM474.1 million net.

“While foreign investors have sold RM10.42 billion of local equities on a year-to-date basis, offsetting last year’s inflow of RM10.33 billion, Malaysia still has the second-lowest foreign net outflow among the four Asean markets that we monitor,” he said in his weekly fund flow report yesterday.

“[Last] Monday saw a decent foreign net inflow worth RM34 million, coinciding with the FBM KLCI’s largest daily gain during the week of 0.25%. Support on (last) Monday came from stalwarts in the banking sector such as CIMB Group Holdings Bhd, Malayan Banking Bhd and Public Bank Bhd, in addition to plantation stocks,” said Adam.

Markets were closed last Tuesday in conjunction with the Maulidur Rasul holiday. “As markets reopened on (last) Wednesday, international funds withdrew RM151.7 million net of local equities, the biggest foreign attrition during the week,” said Adam.

“This follows a sharp 6.4% drop in Brent crude oil price overnight as concerns about a global oversupply continue to loom. The massive outflow was in conformity with other regional peers — South Korea and Thailand.”

Nevertheless, Adam noted foreign investors resumed buying last Thursday, accumulating RM51.5 million net while Bursa Malaysia was little changed, only gaining 0.25 of a point.

“Interestingly, Malaysia fared better than the said regional peers as they still experienced outflows. Foreign inflows were seen again on (last) Friday but at a measurable level of RM14 million net as uncertainty in global trade continues to haunt the Asian region.”

Regionally, Adam said after three straight weeks of foreign buying, foreign investors took a breather as they sold equities in Asian markets.

“Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ offloaded US$1.1 billion (RM4.61 billion) net last week, offsetting the foreign inflows seen in the previous two weeks.

“In emerging Southeast Asian markets, more than half of them experienced foreign net buying.”