‘Foreign funds turn net purchasers’

by **Cals** Wed 14 Oct 2015, 01:47

‘Foreign funds turn net purchasers’

By Surin Murugiah / The Edge Financial Daily | October 13, 2015 : 9:49 AM MYT

KUALA LUMPUR: After selling for two straight weeks, foreign investors turned net purchasers on [size=16]Bursa ([You must be registered and logged in to see this image.] Valuation: 2.10, Fundamental: 2.30) Malaysia last week, according to MIDF Research.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said foreign funds bought RM783.4 million net in the open market (excluding off-market deals), reversing the RM599 million net sale in the preceding week.

He said the RM783.4 million amassed last week was the highest since May 2014.

Zulkifli said the week opened with foreign funds selling last Monday, reflecting a spillover of the momentum from Friday in the previous week.

He said the reversal in the flow started last Tuesday, and buying continued for the rest of the week.

“On Wednesday (last Wednesday), the net purchase amount hit RM290.1 million, the fourth highest in a day this year.

“On Friday (last Friday), it surged to RM384.9 million, the second highest this year after the RM482.4 million mopped up on Sept 17,” he said.

Zulkifli said for 2015, last week’s heavy buying reduced the cumulative net foreign outflow to RM17.6 billion, compared with the RM6.9 billion outflow for the entire 2014.

He said despite the high tide last week, he believes the overhang of foreign liquidity in the market is still very low with foreign shareholding on Bursa at only about 21% to 22% of total market capitalisation.

“The growth in foreign participation rate accelerated to 18% from 16.3% the week before. The average daily gross volume remained elevated at RM1.35 billion, compared with RM1.14 billion the week before.

“On Wednesday (last Wednesday), gross volume hit RM2.08 billion, the fifth highest in a day this year and only the sixth time that the RM2 billion threshold had been broken. Volume was only RM1.43 billion on Friday (last Friday), despite the high net add,” he said.

Zulkifli said that local institutions sold RM595.8 million last week, the highest amount offloaded this year.

He said the participation rate also peaked for the year at RM2.88 billion, adding that the average volume had surpassed the RM2 billion mark in the last nine consecutive weeks.

“Meanwhile, retailers turned aggressive net sellers, selling RM187.6 million on [a] rising yet moderate average volume of RM849 million.

“The early birds are cashing out,” he said.

On the region, Zulkifli said equity markets around the globe made a massive turnaround last week, after a prolonged period of volatile and uncertain trading since China market’s dramatic decline in June.

He said all benchmark indices ended the week in the green zone. Many registered their best five-day return this year.

“The disappointing US job number for September was a catalyst for emerging markets.

“Sentiment was further boosted as the minutes of the US Federal Open Market Committee’s September meeting released on Thursday (last Thursday) increased expectations that a rate hike will only occur in 2016,” he said.

Zulkifli also said after two weeks of selling, foreign funds turned net buyers of Asian equity last week.

“In relative terms, Indonesia was the biggest gainer, where foreign funds bought US$161.8 million (RM669.85 million), the highest in a week since April.

“The rupiah was the best-performing Asian currency last week, gaining a whopping 9.2%,” he said.
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