KUALA LUMPUR – Foreign investors continued to dispose of local equities last week, albeit at a modest RM27.8 million compared with the RM543.7 million a week earlier.
It is the second-smallest weekly foreign net outflow recorded so far this year, said Bank Islam Malaysia Bhd economist Adam Mohamed Rahim.
He said Bursa Malaysia started the week on the right foot as international investors snapped up RM34.3 million in local equities on Monday.
The FBM KLCI index followed suit to close 0.8% higher at 1,512.4 points the same day, in conformity with other regional markets.
“Concerns about rising global Covid-19 infections on Monday were overshadowed by US President Donald Trump’s improving health condition, which helped calm investors’ nerves,” Adam told Bernama.
The following day, however, foreign investors disposed of RM66.8 million in local equities, wiping out Monday’s foreign net inflow, he said.
Profit-taking activity was prevalent among glove makers like Top Glove and Hartalega, with both recording a 3.1% decline on Tuesday.
“This was despite the regional upbeat mood following reports that there was still potential to reach an agreement with US lawmakers on more coronavirus relief, especially with President Trump said to be leaving the hospital after receiving treatment for the virus,” said Adam.
The mood turned sombre on Wednesday, when Trump ordered a stop to talks on another round of aid for the economy until after next month’s presidential election.
International investors then dumped RM161.4 million in local equities, dragging the FBM KLCI 1.3% lower to close below 1,500 points, while other Asian peers, such as South Korea and Taiwan, were all in the green zone.
Offshore investors made their way back to Bursa on Thursday at a measurable level of RM38.6 million.
Hopes for a stimulus were restored when Trump declared his readiness to sign piecemeal measures, including support for individuals, small businesses and airlines.
The S&P 500 climbed to its highest close in over a month after the president tweeted his support for the said spending packages.
International investors upped the ante in buying on Friday, acquiring RM127.4 million in local equities, as investors showed cautious optimism that the US Congress will reach an agreement on stimulus measures.
The local bourse took a cue from the foreign net buying to close 0.7% higher at 1,530.4 points, a level not seen in more than two weeks.
On a year-to-date basis, foreign funds have taken out RM22.3 billion in local equities from Bursa.
In comparison with its Asian peers South Korea, Taiwan, Thailand, Indonesia and the Philippines, Malaysia has the third-smallest foreign net outflow on a year-to-date basis.
South Korea and Taiwan have the largest year-to-date foreign net outflow at more than US$20 billion (RM82.77 billion) each, and in terms of participation, foreign investors remain active on Bursa, with a healthy average daily traded value of more than RM1 billion. – Bernama, October 12, 2020
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