KUALA LUMPUR: Investors classified as foreign offloaded RM351.3 million in Malaysian equities for the week ended last Friday, compared with RM545 million sold the previous week, according to MIDF Research.

The selling last week took the total year-to-date tally of equities sold to RM4.2 billion, eclipsing the RM3 billion net inflow in 2013. In his weekly fund flow report, MIDF Research head Zulkifli Hamzah said Malaysia was again bucking the regional trend in money flow.

He said that while foreign funds started to nibble again in Taiwan, South Korea, India and Indonesia, and put a brake on their selldown of Thai and Philippine stocks, the selldown of Malaysian equities continued at a “sustained but moderate” pace.

Zulkifli explained that foreign investors were net sellers before the Deepavali holiday last Wednesday, but bought a marginal RM19 million when the market reopened last Thursday.

However, hopes for a reversal in sentiment were short-lived, as selling continued last Friday, Zulkifli said.

He said foreign participation stayed “elevated” (more than RM1 billion) for the third week running, adding that average daily gross purchases and sales rose slightly to RM1.08 billion from RM1.05 billion.

As expected, local investors stayed on the sideline last week. The participation rate of local institutions dropped to RM1.84 billion, the first time it fell below the RM2 billion threshold in a long 18 weeks!

“Local funds absorbed RM537 million last week, reflecting market support,” Zulkifli said.

He said retail investors turned significantly bearish, offloading RM186 million, the second-highest selldown in a week this year.

However, the participation rate was moderate with average daily gross sales and purchases at only RM765 million, among the lowest this year, he said.

Commenting on the region,
Zulkifli said after four weeks of turmoil, the world’s equity markets roared back to life last week. He said that at Wall Street, the bellweather market, the Dow Jones rose 2.6%, the best this year, while the S&P 500 rose 4.1%, the best since January 2013.

He said the trend may be reversing, adding that after six straight weeks of a disconcerting selldown, global funds appear to be making a comeback to Asia, although it is still early days for a rise in optimism.

Zulkifli said much of the loss on Bursa Malaysia in October was recouped last week. However, as volume was relatively thin, he said the upward movement was amplified.

“With five trading days left in October, we are not discounting the possibility that the KLCI and the FBM70 may surprise by ending the month in the green zone.

“However, the FBM Smallcap index is unlikely to reverse the situation as it is still too deep in the red zone.

“We would continue to be cautious in the days ahead because market volatility is too high for comfort, oil price is sliding again, and [there is] uncertainty over how the market will react to the result of the ECB’s bank stress test,” he said.

Zulkifli said this week will also see statistics and decisions, as today and tomorrow are the big day when the Federal Open Market Committee meets.

This article first appeared in The Edge Financial Daily, on October 28, 2014.