RM3.68b net foreign funds outflow from local equities so far this year

by **Cals** Wed 05 Feb 2014, 08:28

Posted on 5 February 2014 - 05:38am

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PETALING JAYA (Feb 5, 2014): Foreign funds offloaded RM880.1 million worth of Malaysian stocks in the open market last week despite it only trading for three and a half days last week, according to MIDF Research.

"A total of RM336.4 million of foreign portfolio money left Bursa on the Monday, the second highest this year and the fourth time it exceeded RM300 million in 2014. There was some follow-through selling on Tuesday, but calmness returned to the market on Wednesday and Thursday," said head of research Zulkifli Hamzah.

The trend was in keeping with seven Asian markets that it tracks (Korea, Taiwan, Thailand, Malaysia, Indonesia,
Philippines and India) last week which saw foreign funds selling an aggregate of US$2.73 billion.

All seven markets reported foreign fund exit. India reported a heavy foreign fund outflow of US$501 million, only the second deficit in 22 weeks. The outflow was also heavy in Korea, Thailand, Taiwan and Malaysia.

So far in 2014, a total of RM3.68 billion have exited Malaysian equity, compared to the net inflow of RM3 billion in 2013. In the last 17 weeks, a total of RM9.36 billion of foreign money had exited Malaysian equity, or an average of RM550 million a week, he added.

Interestingly, Zulkifli said, retailers were net buyers during the selldown last week, implying that many are seeing opportunities in the current volatility. For the week, retailers bought RM71.5 million, while local institutions supported the market aggressively last week, as expected.

On the market this week he had opined that the KLCI will show significant weakness when the market reopens because the KLCI was artificially supported last Thursday, and weak sentiment towards equity.

Zulkifli opined that a few stocks, notably Tenaga Nasional Bhd (TNB), propped up the index at the close of trading on Thursday allowing it to pass the 1,800 point mark to close at 1804.03.

He also explained that the decline in the Asian markets that were open on Monday, such as Japan, Korea, Singapore and Indonesia is ominous on the sentiment againts equity.

Zulkifli noted that the Dow Jones losing 326 points or 2.1% on Monday, could not be more ominous for the market this week.

"However, we note that retail investors are exploiting trading opportunities and are not completely risk-averse. There may not be a broad-based rally post Chinese New Year, but the market for small and mid-caps may surprise on the upside," he said.

February has historically been a less volatile than that in January and amid rising risks in emerging markets, it is likely to be a month of consolidation.

The FBM KLCI yesterday showed significant weakness on its first trading day in the Year of the Horse as market sentiment towards Asian equity remained weak following the heavy selling on Wall Street.

The benchmark KLCI index closed down 25.2 points or 1.4%, to 1,778.83 points.

According to JF Apex Securities Bhd, this was mainly dragged down by losses in TNB and Genting Bhd.

"The performance of our benchmark index was in line with most of our regional peers as investor sentiment was dented by weaker than expected manufacturing data posted by US and slowdown in China's economy," it said in its market commentary.

In the U.S, the closely followed ISM Manufacturing PMI for December released on Monday showed a sharp drop to 51.3 from 56.5. That caught investors off-guard leading to heavy selling on Wall Street.