KUALA LUMPUR – Foreign investors withdrew RM178.8 million net of local equities from Monday to Friday last week compared to RM574.3 million offloaded for the whole of the week before.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said foreign investors began the week by withdrawing RM81.7 million net of local equities on Monday last week.
He said political concerns resurfaced following a joint statement made by former prime minister Tun Mahathir Mohamad and Member of Parliament for Gua Musang Tengku Razaleigh Hamzah that the Perikatan Nasional government may lose the vote for Budget 2021 on Tuesday, while offering their expertise in public service to a possible new government.
“As such, the local bourse settled 1.3% lower at 1,662.7 points, the biggest daily drop in two weeks,” he said today.
Adam said international funds continued to sell on Tuesday, albeit at a slower pace of RM39.0 million net.
“The slowdown in foreign net selling activity was partly attributable to the approval of Budget 2021 which signals clarity of upcoming measures for the nation’s economy,” he said.
On the external front, Adam said investor sentiment was mixed amid the likelihood of a second full lockdown in New York if Covid-19 cases continue to soar while positive economic data released by China showed that the nation’s industrial output rose by 7.0% in November from a year earlier, suggesting that China’s economic recovery was gaining momentum.
“Offshore investors surprised the market on Wednesday by acquiring RM142.8 million net of local equities, snapping the eight-day foreign net selling streak seen on Bursa Malaysia.
“In fact, this was the highest daily foreign net buying seen since November 23, 2020. Investors were probably still riding on the wave of optimism coming from the passing of Budget 2021 during the parliamentary session the day before,” said Adam.
He said another factor contributing to the upbeat sentiment on Wednesday was the growing prospect of a United States fiscal stimulus deal to help businesses and the unemployed.
“The level of foreign net buying declined to RM9.6 million on Thursday as the current levels of the FBM KLCI on that day appeared ripe for some profit-taking activity which put a lid on foreign net buying activity,” he said.
In addition, the ban on regulated short-selling activities is scheduled to be lifted on January 1, 2021 after the sanction was imposed for nine months.
Aside from that, Federal Reserve chairman Jerome Powell pledged on Wednesday during the Fed policy meeting to keep injecting cash into markets until the US economic recovery is certain.
“With all these factors combined, retail investors exhibited some risk-on mood by acquiring RM13.5 million net of local equities on Thursday, which partly supported the local bourse to close 0.2% higher at 1,674.4 points,” he said.
Adam said Bursa Malaysia was in chaos on Friday as international investors dumped RM210.5 million net of local equities, dragging the FBM KLCI index by 1.3% to settle at 1,652.5 points.
“Investors were probably taking the opportunity to lock in more gains before the year-end holiday season starts. Aside from that, sentiment was dampened as US lawmakers continued to wrangle over a federal-spending deal in Washington,” he said.
Adam said the participation of foreign investors seemed robust at this moment with foreign investors recording an average daily traded value of RM1.9 billion last week.
“As markets in general are heading into the year-end holiday season, the participation of investors in Bursa Malaysia may take a breather this week,” he said.
On a year-to-date basis, Adam said foreign investors had taken out RM24.8 billion net of local equities in 2020 and recorded 44 weeks of foreign net outflows so far this year.
“Among its Asean peers, Malaysia remains as the nation with the second largest year-to-date foreign outflow after Thailand,” he said. – Bernama, December 21, 2020
