KUALA LUMPUR (Jan 9):Foreign investors began the first week of 2023 on a positive note, and acquired RM72.3 million of Malaysian equities, as compared to net selling of RM204.6 million during the final week of 2022.

In its weekly fund flow report on Monday (Jan 9), the MIDF Research team said that like its other Southeast Asian counterparts, the attraction of foreign inflows into Malaysia may be due to positive sentiments due to a boost from China’s reopening.

It said Prime Minister Datuk Seri Anwar Ibrahim also laid his foot down that decisions on interest rates are the sole prerogative of Bank Negara Malaysia, in which the Government would not intervene, a move that lifted the confidence of investors.

The research house said this came amid questions directed by certain parties towards the central bank on setting the overnight policy rate.

“Foreign investors net sold RM32.3 million last Tuesday and RM22.6 million on Wednesday, before picking up RM86.6 million on Thursday and RM40.6 million on Friday.

“The top three sectors that saw net inflows by foreign investors last week were financial services at RM99.2 million, construction at RM11.1 million, and energy at RM5.3 million.

“The bottom three sectors with net outflows were plantation at RM15.9 million, telecommunications and media at RM13.8 million, and utilities at RM6.7 million,” it said.

MIDF said local institutions turned set sellers for the week, net selling RM124.4 million.

It said they began the week net buying RM19.2 million last Tuesday, before net selling at RM6.1 million on Wednesday, RM91.9 million on Thursday and RM45.6 million on Friday.

The research house said local retailers remained the most optimistic, net buying every day, amounting to RM52.1 million for the week.

“They net bought RM13.1 million last Tuesday, RM28.7 million on Wednesday, RM5.3 million on Thursday, and RM5.0 million on Friday.

“In terms of participation, there was an increase in average daily trading volume among retail investors by 0.8%, while there were declines among local institutions by 17.6% and foreign investors by 19.4%,” it said.

Commenting on the international situation, MIDF said global markets were off to a positive start in 2023, buoyed by the reopening of China’s borders on Sunday, and a stronger-than-expected jobs report but softer wage growth from the US, signalling a potential easing of inflationary pressures that raised hopes of a soft landing by the US Federal Reserve.

The research house said China’s newly-minted Foreign Minister Qin Gang remarked last week that he will continue to “care about and support the growth of China-US relations”.

It said the appointment of Qin, who is China’s former ambassador to the US, is seen widely as a move to ease the tension between the two economic giants.

“Hong Kong’s Hang Seng Index surged 6.1% last week, ahead of China’s reopening on Sunday, leading the list of major indices that we track. Coming in second was France's CAC 40, wich was up by 6.0%, and the third was Germany’s DAX 40, which was up by 4.9%.

“These can be attributed to the easing of Europe’s inflation for the second consecutive month to 9.2% in December 2022 (November: 10.1%).

“Out of the 20 major indices that we track, 16 ended the week positively. Of the four decliners, the bottom three were the Jakarta Composite Index at 2.4%, India’s Sensex at 1.6%, and Malaysia’s FBM KLCI at 1.0%,” it said.