Foreign fund flow into the KLCI turns positive after seven weeks of net selling, says MIDF

Foreign funds were net buyers in the Malaysian stock market last week after being net sellers for the previous seven weeks, according to a research note released by MIDF Research, Monday.

The research house said that foreign liquidity flow into Asian equity remained steady last week in the seven Asian markets it monitors including Korea, Taiwan, Thailand, Malaysia, Indonesia, the Philippines and India.

For last week, foreign funds were net purchasers of equity in all the markets it tracks with the exception of Thailand. The political unrest in Thailand had seen a steady exit of foreign funds from its equity market

Foreign investors mopped up US$1.63 billion (RM5.35 billion) in stocks from the region compared to US$ 1.84 billion (RM6.03 billion) recorded in the previous week.

MIDF Research said that for the time being it appears that the foreign selling in the Malaysian market had stopped.

In the last week, foreign portfolio investors made a net purchase of Malaysian shares in the open market (excluding off market transactions) amounting to RM296.2 million. In the preceding 20 weeks, the net sale averaged RM563.3 million.

On Friday last week, the net purchasers recorded was RM419.1 million which was the highest figure since May 8, 2013 which was the aftermath of the 13th General Election.

Retail investors’s optimism also spiked as reflected by their net purchase of RM164.9 million which was the highest since mid – November last year. Daily participation rate stayed above the RM1 billion mark for the second consecutive week at RM1.07 billion, compared to RM1.28 billion in the week before.

MIDF Research said in its report that local institutional funds are currently aggressively offloading their position and realising profit early in the year to meet their dividends target. Local funds sold RM461.1 million worth of stocks last week, the highest since September 2013.

Local institutional participation rate in the market remained at RM2.46 billion last week, the second highest since August 2013.

MIDF in its report stated that trading is expected to be stronger for the month of March. The KLCI had performed well during the month in the last four years, with an average growth of 2.8%.

Market conditions are expected to be positive this week with oil prices elevated with the WTI (West Texas Intermediate) last traded at US$ 102.59 (RM336.4) and the sharp hike in CPO (Crude Palm Oil) to RM2772 per metric tonne.