KUALA LUMPUR – Foreign investors withdrew RM288.2 million net of local equities in the third week of 2021, compared with the RM326.1 million acquired in the preceding week.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the week started on a rather sluggish note as international investors sold RM57.2 million net of local equities last Monday, snapping a seven-day buying streak on Bursa Malaysia.
Sentiment on Monday was positive amid China’s economy staging a recovery to pre-pandemic growth rates in the fourth quarter of 2020, propelling it to a full-year expansion of 2.3% and making it the only major economy to avoid a contraction.
Nevertheless, there were some selling activity in local banking stocks on Bursa amid speculation of a cut in the overnight policy rate (OPR) by Bank Negara Malaysia (BNM) on Wednesday.
“The pace of selling activity by foreign investors slowed to RM14.8 million net on Tuesday, as investors took a cue from the 2.7% rise in Hong Kong’s Hang Seng index, driven by Chinese investors, who are targeting national firms, such as China Mobile Ltd, that had earlier sold off on the imposition of United States restrictions,” Adam told Bernama.
He said the contraction in foreign net selling activity continued on Wednesday to reach RM8.9 million as BNM kept its benchmark interest rate unchanged at a record-low 1.75% at its first meeting of the year.
The move somewhat calmed the nerves of investors, particularly those with exposure in banking stocks, as an unchanged OPR means a lower risk of net interest margin compression for banks.
“The latest decision by BNM to maintain the OPR also indicates that the central bank is probably adopting a wait-and-see approach, awaiting the response of businesses towards the Malaysian Economic and Rakyat’s Protection assistance package announced on January 18,” said Adam.
There was havoc on Thursday when international funds dumped RM117.7 million net amid a sell-off in rubber glover counters.
Adam said the dampened sentiment in rubber glove stocks was due to the 0.4% appreciation of the ringgit against the US dollar, which could hurt glove makers’ revenue as their products are exported to other countries.
Friday saw a foreign net outflow of RM89.7 million, as risk appetite was dented following reports that Hong Kong planned to lock down tens of thousands of residents for the first time to contain a worsening Covid-19 outbreak.
Nevertheless, said Adam, buying interest in rubber glove counters returned on Friday amid the high number of coronavirus infections around the globe, which helped prevent further selling activity by foreign funds.
MIDF Amanah Investment Bank Bhd, in a research note, said since the beginning of 2021, retailers are cumulatively the only net buyers of Malaysia’s equity market to the tune of RM1.16 billion.
Local institutions and foreign investors are net sellers to the tune of RM862.97 million and RM299.09 million, respectively.
“In comparison to another three Southeast Asian markets that we tracked last week, Thailand and Indonesia recorded foreign net inflows, whereas the Philippines and Malaysia experienced net outflows,” said MIDF.
In terms of participation, retail investors recorded a weekly decrease of 9.49% in average daily trade value (ADTV), while foreign investors and local institutions experienced declines in ADTV of 23.16% and 7.66%, respectively. – Bernama, January 25, 2021
