Foreign investors dispose of RM40.7 mln local equities last week

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said Bursa Malaysia started off the week on the negative foot as international investors disposed of RM107.2 million net of local equities on Monday.

“On further scrutiny, all rubber glove counters on the FBM kLCI index remained in the red on Monday, declining by at least 2.9 per cent as the social media-driven retail frenzy continued to subside as retail investors were probably lacking financial strength to support buying activity for the rubber glove counters.

“As such the Bursa Malaysia Healthcare index was 2.3 per cent lower on Monday, making it the biggest loser among other sectoral indexes,” he told Bernama.

However, the level of foreign net selling shrank to just RM8.6 million on Tuesday as risk-on sentiment turned stronger amid the ascent in the oil price which hit a 13-month high amid optimism in demand.

Adam said the move by governments and central banks around the world to continue massive spending and easy money policies until officials are certain that their economies will recover from the coronavirus pandemic has also led to expectations about an increase in inflation, which coincides with economic growth, giving rise to risk-taking behaviour.

“Internationals funds later made their way back to Bursa Malaysia as they snapped up RM33.3 million net of local equities on Wednesday. The FBM KLCI index finished 0.7 per cent higher on Wednesday, (with) the banking counters, which have a higher weightage in the FBM KLCI index, saw heavy buying interest on Wednesday,” he noted.

On the other hand, oil and gas counters were rather sluggish despite the rally in crude oil price amid concerns that elevated prices will prompt producers to pump more crude which will push oil prices down.

He said Thursday continued to see a foreign net inflow of RM41.8 million although it was the eve of the Chinese New Year, as investors tended to trade lightly ahead of the long weekend.

“The foreign net buying on Thursday, however, only helped push the local bourse 0.2 per cent higher but still bucked the losses seen in ASEAN peers such as the Philippines, Singapore and Thailand.

“Perhaps the slightly larger-than-expected decline was cushioned by the rally in certain blue-chips, namely Tenaga Nasional Bhd, which rose by more than 3.0 per cent following the appointment of its new chief executive officer (CEO), a day after its previous CEO announced his exit,” he added.

Adam said another sector that supported the local bourse was the banking sector, involving stocks such as Public Bank and Hong Leong Bank, amid the anticipation of an economic recovery this year, which set to boost demand for financing and see a decline in impairments.

On Thursday, Bank Negara Malaysia announced Malaysia’s economy shrank 3.4 per cent in the fourth quarter (Q4) of 2020 amid the COVID-19 resurgence, bringing the full-year contraction to 5.6 per cent.

The country last recorded a contraction in 2009 at -1.5 per cent and 2020's contraction was the worst since the 7.4 per cent decline in 1998.

At 12.30pm on Thursday, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.57 points to 1,599.42 during the half-day trading compared to Wednesday’s close of 1,596.85. The market was closed on Friday for the Chinese New Year holiday.

Year-to-date, Malaysia has seen a foreign net outflow of RM757.8 million net in 2021.