Foreign funds outflow exceed RM1b again

Posted on 11 February 2014 - 05:38am

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PETALING JAYA (Feb 11, 2014): Foreign funds offloaded RM1.1 billion worth of local stocks from Bursa Malaysia last week, making it the 17th week out of the last 18 that foreign investors had been net sellers, according to MIDF Research.

"Foreign selling was still in aggressive mode last week. It was the second week this year that the net sale amount exceeded RM1 billion," said head of research Zulkifli Hamzah.

In a report yesterday, Zulkifli acknowledged that foreign funds continued to sell Asian stocks aggressively last week, as the foreign investors offloaded an aggregate US$4.36 billion (RM14.6 billion) of stocks in seven Asian markets, namely Korea, Taiwan, Thailand, Malaysia, Indonesia, Philippines and India.

At the height of market concerns over the US Federal Reserve tapering of its bond purchases, he said, that was the highest level of foreign capital outflow from Asia since June last year.

Closer to home, the intensity of daily foreign sale increased last week, said Zulkifli.

"After the Chinese New Year break, the selling was heavy last Tuesday, as foreign investors sold RM555.7 million, the highest since Aug 21 last year," he said.

A total of RM4.78 billion have exited Malaysian stocks year-to-date, said Zulkifli, adding that some RM10.45 billion of foreign money had exited Malaysian equity in the past 18 weeks.

However, retail investors were strong buyers last week, netting RM107.7 million, the highest in about three months.

Zulkifli opined that many retail investors are still cautious sticking to the sidelines, but the aggressive ones have been buying on weakness.

On another note, the market benchmark, FBM KLCI closed the week above 1,800 points, marking the 11th week in a row that the index closed above the critical level.

Zulkifli attributed the index performance to "clearly on invisible support of the key heavyweight stocks".

For the year, the KLCI has now lost only 3.1%.

Technically, said Zulkifli, the second and third liners are in a bullish zone, while the retail investors are in aggressive mood as reflected by the surge in trading volume last week.

"We believe the lunar new year horse is ready to gallop now. The market for small and mid-caps has now sprung to life. The small money is hungry!" he said.

Zulkifli, however, warned investors to stay on the sideline for the top 100 stocks on Bursa.

The 30 KLCI-component stocks may be supported by the "invisible hands", to ensure that the index stay above 1,800 pints, he said.

Meanwhile, Zulkifli also opined that the remaining 70 biggest-capitalised stocks are heading for the danger zone, which the research house would be "extremely cautious" over.