Fund Flow Foreign Funds increased holdings of Malaysian stocks by RM265.8m last week

by **Cals** Mon 12 May 2014, 11:07

Fund Flow Foreign Funds increased holdings of Malaysian stocks by RM265.8m last week

Business & Markets 2014

Written by Surin Murugiah of theedgemalaysia.com

Monday, 12 May 2014 10:58

KUALA LUMPUR (May 12): Foreign Funds increased holdings of Malaysian stocks by RM265.8 million last week, after adding RM402 million the week before, according to MIDF Research.

In his Fund Flow report Monday, MIDF Research head Zulkfili Hamzah said the mop-up rate in the open market (i.e excluding off-market deals) was moderate, averaging only RM53.2 million per day and ranged RM25 million-RM96 million.

“However, it was noticeably steady. Foreign funds were net purchasers on Bursa every single day last week. Buying momentum appears to be picking up, as the amount had risen progressively during the week to peak on Friday at RM96 million,” he said.

Zulkfli said the steady flow of foreign portfolio capital over the last two months had reduced the cumulative net outflow from Malaysia in 2014 to negative RM4.7 billion in the year-to-date.

“In 2013, Malaysia reported a net inflow of RM3 billion, he said.

Zulkfli said the moderate rate of foreign accumulation was reflected by the significant drop in participation.

He said the average daily foreign participation rate (average daily gross purchase and sale) fell significantly to only RM672 million from RM1.1 billion the week before.

“Indeed, it was the lowest this year, as portfolio managers probably kept quiet ahead of the public holiday on Tuesday. We expect participation rate to stay depressed this week,” he said.

He said retail investors remained anxious, offloading RM31.9 million, after selling RM113.8 million the week before.

“Participation rate continued to plunge, to only RM682 million, among the lowest this year.

“As expected, local institutions sold gain last week, amounted to negative RM233.9 million, after clearing negative RM288.6 million the week before. Participation of the local funds also fell significantly to RM1.96 billion. It was the first time that participation rate averaged below RM2 billion this year. Last year, it averaged RM1.9 billion,” he said.

Commenting on the region, Zulkfli said MIDF Research has hinted earlier that the flow of global fund to Asian equity was easing, adding that this was confirmed with the aggregate net outflow last week.

He said that after seven straight weeks of buying, global funds turned aggregate net seller of stocks in the seven Asian equity markets that MIDF Research tracks (Korea, Taiwan, Thailand, Malaysia, Indonesia, Philippines and India).

“The amount of outflow amounted to US$680.6 million. In the preceding seven weeks, global funds pumped in US$14.7 billion into the seven markets, or an average of US$2.1 billion a week,” he said.

Zulkifli said most of the outflow was from the more developed markets of Korea and Taiwan.

He said foreign funds sold Korean stocks for the second week running, but sold Taiwanese stocks for the first time after a strong buying stretch of 13 weeks.

These two markets reflect the selldown of technology stocks, which is the contagion effect from the fallout on Wall Street, he said.

“Foreign funds also sold Thai stocks after a 7-week stretch of buying. However, the amount was still small, only -USD72.8m, obviously reflecting investors’ edginess over the state of politics in the country. The numbers are likely to get uglier this week.

“Elsewhere, the foreign buying stretch continued in Indonesia, Philippines and India. Malaysia also reported foreign buying,” he said.