Foreigners make comeback on Bursa

by **Cals** Wed 09 Mar 2016, 01:25

Foreigners make comeback on Bursa

By Surin Murugiah / The Edge Financial Daily | March 8, 2016 : 10:03 AM MYT

This article first appeared in The Edge Financial Daily, on March 8, 2016.

[You must be registered and logged in to see this image.]KUALA LUMPUR: Foreign purchases swung to the positive region last week, with foreigners buying RM972.2 million net worth of equities on Bursa Malaysia, more than triple that in each of the preceding two weeks. This is estimated based on transactions in the open market, excluding off-market deals.

In his weekly fund flow report yesterday, MIDF Research head Zulkifli Hamzah said the bulk of the purchases came in the latter half of last week as foreign investors bought more than RM300 million a day from Wednesday to Friday.

He said the week started on an edgy note as foreigners dumped RM137.6 million on Monday, the highest in 23 trading days.

“Sentiment was dampened by heavy selling in China during the morning session.

“The outflow started to reverse on Tuesday, and by Wednesday, foreign investors had pumped in RM350 million, the third highest in a day this year,” he said.

“The buying peaked on Thursday as the purchased amount hit RM391.6 million, the fifth highest since the start of 2014,” he said.

Zulkifli said there was still active buying on Friday, but the amount receded to RM303.3 million.

He said last week’s foreign purchases swung the cumulative year-to-date flow-of-fund figures into the positive region, with a net surplus of RM567.4 million.

He said for the entire 2015, the net outflow was RM19.5 billion.

Zulkifli said in February, the net foreign purchases totalled RM570.7 million, the first monthly surplus in four months.

He said the foreign participation rate had surged to its highest since the first week of December.

Zulkifli said the average daily traded value of shares spiked to RM1.40 billion, almost 50% higher compared with the week before.

He said in the last three trading days, the participation rate ranged between RM1.36 billion and RM1.51 billion, an elevated level.

“Local investors took the opportunity of foreign buying to offload RM819.7 million.

“[The] participation rate surged to RM2.23 billion, surpassing the RM2 billion level after averaging less than that in the three weeks prior.

“Despite heavy institutional presence, retailers’ conviction in the market remained low. Retail investors offloaded RM152.5 million, the highest attrition in nine weeks,” he said.

Zulkifli said sellers dominated the participation rate, as trading activity was still subdued at RM624 million, only a slight pickup from RM621 million the week before.

Commenting on the region, Zulkifkli said it was green across the board for equity markets around the world last week, with a few standout performances, mainly in Asia.

He said there was some jitteriness earlier in the week after losses in China. “However, things turned around after China’s central bank announced [on] Monday evening a cut in the statutory reserves ratio by 50 basis points to 17%, which will inject about 685 billion yuan (RM430.42 billion) into the financial system.

“On Saturday, China announced during the National People’s Congress that it is setting a gross domestic product growth target of 6.5% to 7%. China’s CSI 300 [Index] rose 4.95% last week, the best since October last year,” he said.

Zulkifli said another market driver last week was the continued recovery in crude oil prices.

He said the price of Brent crude punched through the US$38 (RM154.66) per barrel level last Friday, and was last traded at US$38.72 per barrel, up 10.3% and the highest on closing since Dec 10.

Zulkifli said the biggest push was arguably news coming out of the United States. Production fell for the sixth consecutive week, the oil rig count declined further and US employment was significantly above estimates, with non-farm payrolls rising by 242,000 in February, and unemployment falling to 4.9%.