Foreign funds bought RM1.23b last week, says MIDF Research

by **Cals** Thu 04 Feb 2016, 07:57

Foreign funds bought RM1.23b last week, says MIDF Research

By Surin Murugiah / The Edge Financial Daily | February 3, 2016 : 10:29 AM MYT

This article first appeared in The Edge Financial Daily, on February 3, 2016.

KUALA LUMPUR: After dumping shares listed on Bursa Malaysia in the first three weeks of 2016, foreign investors returned with a proverbial bang last week, mopping up local shares at a rate not seen for an extended period of time, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said the total amount of equities purchased by foreigners, net of sales, hit RM1.23 billion last week, estimated based on transactions in the open market and excluded off-market deals.

He said any amount exceeding RM1 billion is a rare occurrence for the Malaysian market, and last week’s numbers were the highest since the first week of April 2013, just prior to the general election (GE).

Zulkifli said net foreign buying was recorded throughout the week.

He said the buying picked up last Wednesday and exceeded RM300 million last Thursday, the first time the threshold was surpassed since Oct 9 last year.

He said the buying turned into a frenzy last Friday, as foreign investors loaded up RM706.1 million.

“It was the highest since the RM1,431 million and RM989.8 million purchased on May 6 and 7, 2013, respectively in the aftermath of the GE.

“Last week’s strong foreign purchases meant that the outflow for the month of January shrank to only RM975 million net. For the entire 2015, the net outflow was RM19.5 billion,” he said.

Zulkifli said the foreign participation rate (average daily traded value of shares) surged last week to RM1.37 billion, the first time it exceeded RM1 billion this year and the highest since the trading week ended Oct 16 last year.

He said foreign participation hit a massive RM2.46 billion last Friday, only the eighth occasion that the RM2 billion mark had been broken since the start of 2015.

He said local institutions and retailers took the opportunity of foreign buying to offload RM1.12 billion and RM117 million respectively.

“The participation rate of local institutions surged to RM2.84 billion, but retail activity remained surprisingly subdued, with trade averaging RM713 million, dropping from RM827 million the week before,” he said.

Commenting on the region, Zulkifli said equity markets around the world roared back to life after three weeks on the edge.

He said a glaring exception was China, where the CSI 300 index closed last week down 5.4%. The index fell another 1.5% on Monday.

“China aside, the current recovery in crude oil prices has a lot to do with the current rebound in the global stock markets.

“The price of Brent crude oil added 8% to end last week at US$34.74 (RM145.91) per barrel,” he said.

Zulkifli said oil prices had also been boosted by the Bank of Japan’s (BoJ) announcement of a negative interest rate strategy to compel banks to lend.

“It complements the BoJ’s quantitative easing programme. The yen fell 1.7% on Friday after the announcement. The ringgit rose strongly against the greenback to last trade at 4.148 against the US dollar, the strongest since Oct 15, 2015.

“It was the best-performing currency in Asia last week, adding 3.49%. Meanwhile, the FBM KLCI rose 2.62% last week, its best in 16 weeks,” he said.