Foreign funds continue to dominate

KUALA LUMPUR: Foreign funds were net buyers of
Malaysian stocks for the eighth consecutive months, despite the heavy
selldown during the later part of last month.



Data compiled by Business Times revealed that foreign funds invested
RM8.74 billion in stocks and sold RM8.29 billion worth of stocks last
month, making them net buyers of more than RM400 milllion.

However,
the figure is some 75 per cent lower than that registered in April,
when foreigners were net buyers of more than RM1.6 billion worth of
stocks.

“A part of the selldown is attributed to the eurozone
crisis in the second half of the month,” said a research head from a
local brokerage.

“Nevertheless, the buying picked up again
during the last three days of the month. This is partly because the
selling was overdone and the slump had left many stocks at valuations
that made them attractive to long-term investors.”





Data revealed that foreigners were net seller of RM81.1 million during the second half of May.

If
not for the renewed interests in Malaysian stocks in the final three
days of May, which represents a net buying of RM315.89 million, the
eight-month streak would have been snapped.

Monitoring foreign
investors’ buying interests in Malaysian stocks is important as it
reflects their risk appetite for the local market.

Also, their investment decisions have a direct impact on the market’s movements.

For example, on May 2, when foreigners were net buyers of RM209 million worth of stocks, the benchmark FTSE Bursa Malaysia
KLCI rose 12 points to 1,582.39.

On
May 16, when they were net sellers of RM175.63 million, the FBM KLCI
ended the day 25 points lower. The following day, when the index
recovers by about eight points, foreigners were net buyers of RM192.04
million.

Thanks to the push on the final three days of the
month, May ended up to be a positive month, with the FBM KLCI rising by
10.06 points to 1,580.67.

During the month, 82 companies saw
their shares traded at their 52-week high, while 102 companies saw
their shares at their 52-week low.

Among the stocks that were
traded at its 52-week high were Alliance Financial Group Bhd, Axiata
Group Bhd, Crest Builder Holdings Bhd and KPJ Healthcare Bhd.

Stocks that were traded at their 52-week low included MISC Bhd, Green Packet Bhd, YTL Power International Bhd and XOX Bhd.

The
Malaysian stock market is trading at slightly over 15 times the
price-earnings (PE) ratio, which is significantly higher than
Singapore's market of about nine times PE and slightly higher than
Thailand's market of about 14 times PE.

+1 so tomorrow recover +5 points