Foreign investors return after 3 weeks of selling

by **Cals** Wed 20 Aug 2014, 00:42

Business & Markets 2014

Written by Surin Murugiah of theedgemalaysia.com

Tuesday, 19 August 2014 09:29

KUALA LUMPUR: After three consecutive weeks of selling, foreign investors repurchased stocks listed on Bursa Malaysia, and mopped up RM261.6 million for the week ended Aug 15, said MIDF Research.
In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said in the preceding three weeks, the outflow had averaged RM257 million.
Zulkifli said foreign investors were net sellers last Monday, reflecting negative spillover from the preceding Friday when markets in the region came under selling pressure as geopolitical concerns spiked.
“However, foreign funds turned net buyers in the remaining four trading days of the week, in consonant with the rebound in regional markets.
“The net amount purchased surged to RM186.8 million, the highest in 20 trading days,” he said.
Zulkifli said that on a cumulative basis, foreign investors remained net sellers of Malaysian stocks in 2014.
However, he said the amount of outflow for the year had subsided to RM1.97 billion as of last Friday.
In 2013, Malaysia reported a net inflow of RM3 billion.
Zulkifli said foreign participation, as measured by the average daily foreign gross purchase and sale on Bursa, dropped to RM784 million, the lowest in three weeks.
He said foreign weekly participation rate had been volatile since May this year, ranging from a weekly average of RM672 million to as high as RM2.2 billion.
Zulkifli said the retail market is currently very active but investors remained cautious. Retail investors offloaded RM31.3 million last week, the 18th consecutive week of selling.
“More importantly, the participation rate surged to RM1.2 billion, the second highest this year after the week ended Feb 21.
“After supporting the market for three weeks, local institutions reduced their holdings last week, selling RM230.3 million net.
The participation rate was elevated at RM2.79 billion, the second highest this year,” he said.
Meanwhile, commenting on the region, Zulkifli said equity markets around the world came back to life after a challenging phase spanning a period of about a month.
He said that for the second time this year, all markets that we tracked ended the week in the greenzone.
The last time all markets gained in concert was in the first week of April, he said.
Zulkifli said global funds bought back Asian equity last week in a hasty reversal of their exit the week before.
Arguably, global investors’ appetite for Asian equity have “normalised” after it was severely dented by the situation in the Ukraine and Iraq, he said.
“Five emerging Asia markets that we tracked attracted US$461 billion (RM1.5 trillion) of foreign portfolio funds last week, the highest in about four weeks.
“In relative terms, the biggest gainer was the Philippines. Thailand also reported a significant rebound in foreign buying after two weeks of selling.
“However in Indonesia, foreign funds sold stocks for the second consecutive week after the government announced that its current account deficit more than doubled in the second quarter of 2014,” he said.
Zulkifli said the FBM KLCI remained behaviourally consistent, as it “bounced” upon hitting the long-term support.
“Expect a healthy market ahead, as the week is clear of potholes,” he said.

This article first appeared in The Edge Financial Daily, on August 19, 2014.