Foreign fund outflow widens to RM370.4 million during Aug 24-27

KUALA LUMPUR (Aug 30): Foreign investors continued to offload Malaysian equities from Aug 24 to 27, with net selling widening slightly to RM370.4 million against RM344.2 million in the previous week.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said Bursa Malaysia started last week on a weak note as international funds disposed of RM120.9 million worth of local equities last Monday.

Speaking to Bernama, he said the benchmark index FBM KLCI closed 0.5% lower at 1,568.6 points on the same day, dragged down by banking stocks such as Public Bank Bhd, which declined 1.9%.

Last Tuesday, foreign net selling remained high at RM116.2 million despite news of American biotechnology company Moderna Inc’s plan to provide 80 million doses of its experimental Covid-19 vaccine to the European Union, as well as the move by the United States and China move to reaffirm their commitment to the phase-one trade deal.

On the domestic front, the positive news regarding the Covid-19 vaccine triggered some profit-taking from glove counters such as Top Glove Corp Bhd and Hartalega Holdings Bhd, resulting in both counters contracting by more than 5% on the same day, Adam said.

However, foreign investors made a modest return to Bursa Malaysia last Wednesday as they bought RM1.9 million net of local equities, snapping five consecutive days of selling spree.

In contrast, regional peers such as Philippine and Indonesian markets experienced foreign net outflows for the day as investors took the cue from the lacklustre Wall Street, following talks between the US and China on the status of a deal meant to work as truce in their trade war.

Last Thursday, foreign net selling resumed at RM135.2 million.

“Sentiment was dampened after mainland China fired four missiles into the disputed South China Sea, which Beijing had claimed as its sovereign territory, but considered an international waterway by the US and other nations,” Adam said.

Additionally, he said investors had waited for the US Federal Reserve (Fed) chairman Jerome Powell’s address, which highlighted the Fed’s new strategy of allowing inflation and employment to run higher in a shift that would likely keep interest rates low for years to come.

Meanwhile, year-to-date (YTD), Malaysia has seen a foreign net outflow of RM20.2 billion.

Compared with its ASEAN peers, Malaysia has the second-largest foreign net outflow after Thailand, which registered a YTD foreign net outflow of US$7.7 billion, Adam added.

Last Friday, Prime Minister Tan Sri Muhyiddin Yassin announced that Malaysia’s economy had started to show positive signs of a recovery following the gradual reopening of businesses.

He also said that the government had decided to extend the Recovery Movement Control Order until Dec 31, 2020.–The Edge

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