KUALA LUMPUR – Foreign funds acquired RM425.3 million net of local equities on Bursa Malaysia as at March 19, bringing the cumulative year-to-date foreign net outflow to RM1.3 billion (US$318.2 million).
“This is lower than some of its Asean peers such as Thailand and the Philippines which recorded a foreign net outflow of US$1.1 billion and US$849.6 million, respectively, so far in 2021,” said Bank Islam Malaysia Bhd economist Adam Mohamed Rahim.
During the third week of March, he said foreign investors sold RM101.1 million net of local equities compared to the RM240.7 million in the preceding week.
Adam noted that Bursa Malaysia began the week on a positive note as international investors mopped up RM26.0 million net of local equities on Monday.
“Regional sentiment was aided by China’s economic activity which surged in the first two months of 2021 compared with a year ago, though the figures showed an uneven recovery with strong industrial output fuelled by exports but lagging consumer spending,” he told Bernama.
On Tuesday, he said international investors turned net sellers on the local bourse as they withdrew RM21.4 million net ahead of the US Federal Reserve’s key monetary policy meeting on Wednesday.
Apart from that, he pointed out that the risk-on mode was disrupted by news that Europe’s biggest countries, including Germany and France, decided to suspend the use of AstraZeneca’s Covid-19 vaccine amid bloodclot fears that has created yet another delay for the European Union’s inoculation campaign.
“Foreign investors returned to Bursa Malaysia on Wednesday to the tune of RM12.8 million net as glove counters saw some buying interest following the move by European countries to suspend the use of AstraZeneca’s Covid-19 vaccine which raised prospects of higher glove usage in that region.
“Nevertheless, the suspension was later lifted at the end of the week amid the surge in cases and new lockdowns,” he said.
On Thursday, foreign funds continued buying local equities albeit at a slower pace of RM9.5 million net following a pledge by the Fed to keep interest rates near zero for a longer period despite an expected rise in inflation.
To recap, the US Fed’s Federal Open Market Committee’s (FOMC) maintained its policy rate at the existing level of 0-0.25% after the March 2021 FOMC meeting.
It also upgraded its 2021 GDP growth forecast from +4.2% to +6.5%.
“Friday then wreaked havoc as foreign investors dumped RM128.0 million net of local equities as the first high-level talks between the US and China did not turn out quite well,” said Adam.
In another development, Prime Minister Tan Sri Muhyiddin Yassin announced an additional stimulus programme aimed at combating the Covid-19 pandemic and empowering the economy and the rakyat during the revitalisation stage.
The additional stimulus program dubbed the Strategic Programme to Empower People and Economy (Pemerkasa) amounts to RM20 billion with an additional fiscal injection of RM11 billion by the government. – Bernama, March 22, 2021
