KUALA LUMPUR: After selling Malaysian stocks relentlessly since the start of the year, foreign investors appear to have made a reversal last week, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said foreign selling peaked in the third week of January and has abated significantly thereafter.

“Still, it is early days and any firm conclusions would be premature. It is a welcome respite nevertheless,” he said.

Zulkifli said last week, foreign investors bought, on a net basis, a total of RM268.6 million of Malaysian equity.

He said there was a buying frenzy last Wednesday, when the market reopened after the long break.

“The FBM KLCI rose by as much as 50.15 points within minutes of the opening bell.

“On the day alone, foreign investors mopped up RM333.3 million net, the highest in a single day since May 20, 2014,” he said.

Zulkifli said the gross value traded on the day exceeded RM2 billion for the first time since March 21 last year.

He said on a cautious note, foreign investors were net sellers last Thursday and Friday, albeit marginally on both days.

He said as money flow tends to be intermittent and lumpy in the early stages of a trend reversal, last Wednesday could either be the first of multiple waves, or it could fizzle out disappointingly.

“The days ahead will testify to this. Last week purchases reduced the cumulative net foreign outflow for 2015 to RM2.1 billion. The cumulative foreign outflow for the entire 2014 was RM6.9 billion,” he said.

Zulkifli said foreign volume was strong, with foreign participation rate (daily average gross purchase and sale) surging to RM1.55 billion, the highest since May 2014.

He said foreign participation had exceeded RM1 billion five weeks in a row now.

“Both local institutions and retailers were net sellers, offloading RM162.8 million and RM105.8 million respectively.

“Participation rate for the institutions was elevated at RM2.3 billion but retailers remained on the sidelines although the participation rate crept up to RM814 million,” he said.

On the regional markets, Zulkifli said after the inertia in January, Wall Street came alive last week.

He said the Dow Jones rose 3.8%, the highest gain since January 2013.

Zulkifli said the main driver for the bellwether equity market last week was unmistakably the recovery in crude oil price.

He said the price of Brent crude rose by 20%, the biggest two-week margin since March 1998.

For the third week running, global investors were strong net buyers of Asian equity, he said.

Zulkifli said the momentum continued to favour emerging Asia.

He said global funds had been simultaneous net buyers in Thailand, Indonesia and the Philippines for three weeks in a row.

“But more importantly, the buying also extended to Malaysia last week, making it the first time since August 2014 that foreign investors were net buyers in all four Southeast Asian emerging markets at once.”

He said the FBM KLCI gained ground last week and had now lost only 1% in the year-to-date score.

This article first appeared in The Edge Financial Daily, on February 10, 2015.