KUALA LUMPUR – Foreign investors disposed of RM40.7 million net of local equities during the second week of February 2021 compared to the RM117.5 million acquired in the preceding week.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said Bursa Malaysia started off last week on a negative foot as international investors disposed of RM107.2 million net of local equities last Monday.
“On further scrutiny, all rubber glove counters on the FTSE Bursa Malaysia Kuala Lumpur Commodities Index (FBM KLCI) remained in the red last Monday, declining by at least 2.9% as the social media-driven retail frenzy continued to subside as retail investors were probably lacking financial strength to support buying activity for the rubber glove counters,” he told Bernama.
“As such, the Bursa Malaysia Healthcare index was 2.3% lower last Monday, making it the biggest loser among other sectoral indexes.”
However, the level of foreign net selling shrank to just RM8.6 million last Tuesday as risk-on sentiment turned stronger amid the ascent in the oil price which hit a 13-month high amid optimism in demand.
Adam said the move by governments and central banks around the world to continue massive spending and easy money policies until officials are certain that their economies will recover from the coronavirus pandemic has also led to expectations about an increase in inflation, which coincides with economic growth, giving rise to risk-taking behaviour.
“Internationals funds later made their way back to Bursa Malaysia as they snapped up RM33.3 million net of local equities last Wednesday. The FBM KLCI finished 0.7% higher last Wednesday, (with) the banking counters, which have a higher weightage in the FBM KLCI, saw heavy buying interest last Wednesday,” he noted.
On the other hand, oil and gas counters were rather sluggish despite the rally in crude oil price amid concerns that elevated prices will prompt producers to pump more crude which will push oil prices down.
He said last Thursday continued to see a foreign net inflow of RM41.8 million although it was the eve of the Chinese New Year, as investors tended to trade lightly ahead of the long weekend.
“The foreign net buying last Thursday, however, only helped push the local bourse 0.2% higher, but still bucked the losses seen in Asean peers such as the Philippines, Singapore, and Thailand.
“Perhaps the slightly larger-than-expected decline was cushioned by the rally in certain blue-chips – namely Tenaga Nasional Bhd, which rose by more than 3.0% following the appointment of its new chief executive officer (CEO) a day after its previous CEO announced his exit,” he added.
Adam said another sector that supported the local bourse was the banking sector – involving stocks such as Public Bank and Hong Leong Bank – amid the anticipation of an economic recovery this year, which set to boost demand for financing and see a decline in impairments.
Last Thursday, Bank Negara Malaysia (BNM) announced that Malaysia’s economy shrank 3.4% in the fourth quarter (Q4) of 2020 amid the Covid-19 resurgence, bringing the full-year contraction to 5.6%.
The country last recorded a contraction in 2009 at -1.5%, and 2020's contraction was the worst since the 7.4% decline in 1998.
At 12.30pm last Thursday, the FBM KLCI rose 2.57 points to 1,599.42 during the half-day trading compared to Wednesday’s close of 1,596.85. The market was closed last Friday for the Chinese New Year holiday.
Year-to-date, Malaysia has seen a foreign net outflow of RM757.8 million net in 2021. – Bernama, February 15, 2021
