2018 outflow exceeds last year’s net inflow, say analysts
KUALA LUMPUR: Malaysia’s foreign net fund outflow in 2018 exceeded last year’s foreign net inflow of RM10.3 billion, despite a flattened trend towards the end of the year, said analysts.
Year-to-date, the foreign net outflow stood at RM11.62 billion or US$2.80 billion (RM4.15 per dollar).
Malaysian Industrial Development Finance Bhd (MIDF) research analyst Adam Mohamed Rahim said total foreign net outflow from December 24 to 27, 2018 amounted to RM101.6 million, much smaller than the RM360.2 million outflow seen during the same four-day period in the previous week.
“Foreign net selling reduced to below RM13 million on the eve of Christmas Day compared with the previous three trading days which saw foreign net outflow above RM100 million,” he said.
Adam opined that the decline in foreign net outflow was not attributable to the yearend window dressing activities but rather because of Beijing’s pledge to support the economy by slashing taxes and ensuring liquidity was maintained in the wake of global trade tribulation,
As markets reopened after the Christmas break, foreign net selling ramped up to RM60.6 million on Wednesday.
“International funds took the cue from Wall Street’s preholiday sell-off as traders reacted to the political turbulence in Washington over the weekend when US President Donald Trump discussed plans to remove Jerome Powell as Federal Reserve (Fed) chairman,” he said.
Trump resumed his verbal threat towards the Fed on Monday, stating ”the only problem in the nation’s economy is the Fed itself ”, claiming that it did not comprehend matters from the trade war and the strength of the dollar.
Nonetheless, Adam said the level of foreign net selling on Thursday retreated to RM28.1 million amid the overnight jump in Wall Street following a report that holiday sales was robust.
He also noted that Malaysia still retained its position as a nation with the second lowest net outflow (US$2.8 billion) behind the Philippines (US$1 billion), Indonesia (US$4 billion) and Thailand (US$9 billion). — Bernama