Higher net outflow from Bursa last week

Total net outflow on Bursa Malaysia from last Monday to Thursday totalled RM1 billion compared with RM320.4 million in the same period in the previous week.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said foreign participation during the period averaged 30.8 per cent versus 29.2 per cent previously, while local institutional net buys amounted to RM934.2 million from RM211.6 million.

“The local institutional participation rate averaged 47.8 per cent between May 6 and 9, while local retail net buys were RM70.7 million versus RM108.8 million previously. The participation rate averaged 22.1 per cent from 23 per cent.”

He said factors that resulted in the huge outflow were trade tensions between the United States and China.

“At the same time, the blacklisting of telco giant Huawei and its affiliates by the US seems to suggest that the trade spat will not be resolved in the near intermediate term.”

He said there would be a public hearing on the US proposal to raise tariffs on a final US$300 billion of imports from China on June 17.

Further, the Group of 20 summit will take place in Japan on June 28 and 29.

“As such, the trade war developments will continue to hog the limelight. At the same time, investors will be looking for clues as to whether the US Federal Reserve will ease its monetary policy at some point in the future.

“Federal Open Market Committee members will be speaking to the public this week. There will also be comments from the Reserve Bank of Australia (RBA). Again, markets will be watching for signs of a possible easing in monetary policy by the RBA.”

Afzanizam said domestically, last month’s Consumer Price Index will be announced on May 24.

“The inflation rate is expected to remain benign for the whole year as Bank Negara Malaysia reaffirmed the inflation forecast of 0.7-1.7 per cent last Thursday. So, we expect markets to remain ‘timid’ this week. Firstquarter corporate results’ announcements will gain more steam. So, investors would be scrutinising the potential upside or downside.”

M&A Securities Sdn Bhd chief dealing officer R. Sundararajah said the local market had been volatile for the whole week due to the uncertainty over the US-China trade talks.

He said the market is expected to be cautious this week unless there is a positive outcome from the US-China trade negotiations.