Foreign selling narrows to RM190.1 mln last week

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the week began on a rather optimistic note as international investors snapped up RM89.8 million net of local equities on Monday.

“The return of foreign investors into the Malaysian market on Monday came about as the government’s bid to declare a state of emergency to tackle the COVID-19 pandemic did not go through,” he told Bernama.

On the external front, it was reported that Astra Zeneca’s vaccine candidate produced a robust immune response in elderly people.

International investors upped the ante on buying activity on Tuesday as they acquired RM118.8 million net of local equities.

The risk-on sentiment on that day was mainly fuelled by South Korea’s fastest exports growth in decades led a stronger-than-expected rebound from its pandemic-triggered recession, signalling a pickup in global trade amid rising virus waves in key markets.

“This helped offset jitters from the biggest drop in a month seen for the S&P 500 index overnight amid a surge in COVID-19 cases in the US,” he said.

Tables were turned on Wednesday as offshore investors dumped RM118.8 million net of local equities, wiping out what was bought the previous day.

Adam said international investors moved to the sidelines as hopes for a pre-election stimulus in the US faded, with President Donald Trump blaming White House speaker Nancy Pelosi for the delay.

Aside from that, the increasing number of coronavirus infections in Europe was hampering sentiment.

“Friday turned out to be a blood bath on Bursa Malaysia as foreign investors withdrew RM279.9 million net of local equities as the overall sentiment became increasingly cautious ahead of the US presidential elections this week,” he said.

In fact this was the largest daily foreign net outflow in a month.

The local bourse followed suit to close 1.89 per cent lower at 1,466.9 points, a level not seen since the end of May this year.

The month of October recorded a foreign net outflow of RM668.7 million net, marking the 16th consecutive month of foreign net selling on Bursa Malaysia.

“Nevertheless, the foreign net outflow for October was the second lowest recorded so far in 2020.

“This brings the year-to-date foreign net outflow from Malaysia to RM22.97 billion,” Adam said.

Meanwhile, MIDF Amanah Investment Bank Bhd (MIDF Research), in a note, said in comparison to another three Southeast Asian markets that they tracked last week; Indonesia recorded the least foreign net outflow while Thailand experienced the biggest outflow compared to the others.

In terms of retail participation, it said last week saw retailer turned net buyer with RM106.43 million worth of equities last week, while local institutions net bought RM83.61 million during the same period.

Last week also marked the reversal to the net buy after slight pause in momentum two weeks ago.

This was the third week where there was stronger net buying from retailers after three consecutive weeks of net sellers previously.

“This is a potential signal for the return of buying appetite for retailers with bargain-hunting activities, renewed interest in glove stocks with the surge in COVID-19 cases against a volatile Malaysian political backdrop,” it said.

Net buying amounted to RM11.66 billion came from retailers thus far in 2020, while institutions bought to the tune of RM10.96 billion.