Foreign investors withdrew RM535.5 mln net local equities last week

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said international investors started the week by disposing of RM199.7 million net of local equities on Monday as investors feared the possibility of a slow vaccine rollout which may retard global economic recovery.

Likewise, the FBM KLCI index had a rough start to the week as it saw a 1.3 per cent drop on Monday last week to settle at 1,576.6 points, bucking the trend of regional peers such as South Korea, Thailand, Japan, and Hong Kong which ended the day higher, underpinned by optimism from the proposed US stimulus package.

The momentum of foreign net selling accelerated to RM298.9 million on Tuesday as investor sentiment was dampened by the news that a US fiscal relief package might be delayed.

"President Joe Biden said he is open to reshaping his US$1.9 trillion COVID-19 relief proposal as the administration seeks a bipartisan deal, though did not rule out pursuing a Democrat-only route for passage.

"The pace at which foreign investors were selling local equities took a breather on Wednesday as they only sold RM81.3 million net which was in conformity with other Southeast Asian peers such as Thailand, Indonesia and the Philippines," he told Bernama.

On the monetary policy front, traders were expecting US Federal Reserve chair Jerome Powell to maintain the central bank's aggressive support for the US economy when it concluded a two-day meeting on Wednesday.

As the markets reopened from the Thaipusam public holiday, Adam said offshore investors made a modest return by acquiring RM44.4 million net of local equities on Friday.

The foreign net inflow on Friday snapped the eight-day foreign selling streak on Bursa Malaysia.

On further scrutiny, Malaysia was the only country that recorded a foreign net inflow on Friday compared to other Asian markets such as Thailand, Indonesia, the Philippines, South Korea, India, and Taiwan.

Positive vibes spilled over to Malaysia as the US shares on Thursday mounted a comeback from their worst loss since October as moves to limit retail traders' speculation in some companies opened the door for hedge funds to load up on stocks they had been ditching.

Overall, the month of January 2021 saw a foreign net outflow of RM834.7 million net, marking the 19th consecutive month of foreign net outflow from Bursa Malaysia.

"In comparison with other Asian peers under our overage (South Korea, Thailand, Indonesia, the Philippines, Taiwan, and India), Malaysia has the smallest monthly foreign net outflow in January 2021, while South Korea recorded the highest monthly foreign net selling of US$5.2 billion net during the same month," said Adam.

Meanwhile, MIDF Research, in its Fund Flow Report, said since the beginning of 2021, cumulatively, retailers were the only net buyers of the equity market to the tune of RM1.75 billion.

Local institutions and foreign investors were net sellers to the tune of -RM919.25 million and -RM833.87 million, respectively.

Major equity markets worldwide also saw negative performance for the fourth week of 2021, including the US, Singapore and Europe, it said.

On the local front, investors breathed a sigh of relief when Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz gave an assurance that the government will not impose a total lockdown on Malaysia's economy even if the worst-case scenario happens.

He was responding to a question from the media whether the government would impose a full-scale lockdown if the COVID-19 vaccine rollout was not going to sail smoothly as anticipated.