Market View Large foreign fund outflow may dent market progress, cautions BIMB Securities

by **Cals** Tue 08 Apr 2014, 12:58

Market View Large foreign fund outflow may dent market progress, cautions BIMB Securities

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Tuesday, 08 April 2014 11:40

KUALA LUMPUR (Apr 8): Domestic liquidity will continue to support the Malaysian market, but a large fund outflow may slow down the progress at the local bourse, cautioned BIMB Securities Research.

In its monthly review note released today, the research house said that Malaysian equities did not perform in March, as foreign funds continued to sell due to high valuations.

However, BIMB Securities said the local stock exchange performed better on a month-on-month basis as net outflow from foreign funds eased to around RM454 million, due to some foreign inflows in the last week of March.

The research house attributed the inflow to a possible extended quantitative easing (QE) exercise in the US.

The US Federal Reserve has indicated that the QE exercise may be prolonged, despite having accumulated in excess of US$4.2 trillion in bonds over the past five years.

“Whilst investors particularly those in the US rejoice, we question whether they have become too addicted and over reliant on QE,” said BIMB.

Back to the local market, the research house said that there was a lack of catalysts to kick-start the Malaysian market but added that PNB’s RM10 billion ASB2 fund, when fully subscribed, will push the market to trend higher.

On specific sectors, BIMB prefers the oil and gas (O&G) and plantation sectors but advised investors to accumulate on weakness as most stocks are trading at the higher end of their valuation parameters.

It added that the recent approval of the RAPID project would shift investor focus onto O&G companies again.

BIMB had noted that Bumi Armada Bhd, which was dropped from the shariah-compliant list, may reinstate its shariah-compliant status.

“Interestingly, Bumi Armada which is currently out of the SC’s Shariah list had recently proposed to issue RM1.5 billion sukuk which may see them attaining shariah status again,” said the research house.