Foreign selling on Bursa Malaysia last week heaviest since August 2013

PETALING JAYA: Global funds reacted to the unprecedented outcome of Malaysia’s 14th general election (GE14) by dumping RM2.48 billion net of local equities in the open market (excluding off-market deals) last week, the heaviest weekly foreign sell-off in Malaysia since the week ended Aug 23, 2013, according to MIDF Research.
Foreign investors have been net sellers for 10 straight trading days as of last Friday.
Nonetheless, the local stock market remained stable yesterday, in line with gains in the regional markets after the fears of a trade war between the US and China eased. The FBM KLCI rose as much as 10.44 points or 0.6% to 1,864.94 before closing down marginally by 0.92 point or 0.05% at 1,853.58.
The ringgit, meanwhile, weakened 0.2% to 3.9785 against the greenback as at 5pm yesterday.
The research house said the first trading day after GE14 saw a net outflow of RM682.6 million net. Nevertheless, the trading value on Bursa was the highest ever recorded on the same day at RM7.30 billion.
“Foreign selling on Tuesday then swelled to RM837.3 million net, the largest in a day since early February 2018. On Wednesday, foreign outflows tapered to RM320.7 million as investors cheered the post-GE14 reforms, which included the reduction of GST to 0% effective from June 1 in addition to the pardon granted to jailed former deputy Prime Minister Datuk Seri Anwar Ibrahim. The FBM KLCI followed suit to settle 0.54% higher at an eight-day trading high of 1,858 points as buying activity by retailers and local funds continued amid renewed optimism.
“Foreign investors continued selling on Thursday and Friday to the tune of RM384.4 million net and RM251.2 milion net as the surge in US treasury yields during the week crept into minds of investors.”
Due to the intense selling pressure, MIDF Research said the cumulative net inflow into Malaysia so far this year has been substantially reduced to RM40.2 million from RM2.52 billion before GE14.
“We are cautiously optimistic that this cumulative figure may gradually pick up as more political clarity comes into picture. Despite recording the largest weekly outflow among the four Asean markets we monitor last week, Malaysia is still the major beneficiary of foreign inflows.”
Foreign participation remained strong as the foreign average daily trade value (ADTV) soared by almost 100% to RM2.39 billion, the highest in 24 weeks. Similarly, participation in the retail and institutional market was robust as their ADTVs reached a level not seen for 18 weeks.