Foreign funds net sellers of Malaysian stocks for two straight weeks

Foreign funds were net sellers of Malaysian stocks for the second straight week, as they began to take profit from the post-election gains.

Bursa Malaysia data revealed that foreign fund managers have bought RM6.06 billion worth of shares over the past 10 trading days (two weeks), however, they have sold RM7.21 billion worth of shares during the same period.

This makes the foreign funds - which were net sellers for nine out of the past 10 days - net sellers of RM1.15 billion worth of shares.

During the period, US Dollar has strengthen against the ringgit -- from less than RM3.05 (per dollar) two weeks ago to as high as RM3.10 (per dollar) this week.

Prior to the two weeks selling trend, foreign funds were net buyers of local stocks for 24 straight weeks.

MIDF Research, in its report, said that the overhang of foreign liquidity remanined "uncomfortably high".

"Even after the liquidation in the last two weeks, the overhang of foreign liquidity remained uncomfortably high. So far this year, foreign investors have bought net RM17.5billion of Malaysian equity in the open market compared with net RM13.7billion in 2012," said MIDF in its research report.

Although foreign funds' consistent selling may be a sign of the start of a bear market, however, analysts believe it is not time to panic yet.

"This (selling) is pretty much within our expectations. It is expected that the foreign funds take some profit from the recent rally," said Etiqa Insurance & Takaful Bhd head of research Chris Eng when contacted.

So far, the profit-taking has yet to impact the local bourse in a big way. In fact, the benchmark FTSE Bursa Malaysia KLCI gained marginally to 1,775.59 on Friday, versus 1,773.06 two weeks ago.

"We are seeing good support from the local funds, especially the government-linked funds," said Eng.

Malaysian stocks witnessed one of its strongest rally in history since the conclusion of the 13th General Election.

The FBMKLCI, which soared to the historical high of 1,826.22 points during intra-day trading on May 6, gained almost 5 per cent since the election.

So far this year, the index gained by 5.1 per cent or 86.64 points.