Foreign investors will return to Malaysia as PH works on GE14 promises
KUCHING: Foreign investors are expected to return to Malaysia in the long run as Pakatan Harapan gradually works on its promises made during the 14th General Election (GE14).
This observation was made by the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research) in the latest fund flow report which had highlighted that international investors remained in selling mode during the election- shortened week.
Last week saw markets open only on Monday and Tuesday.
“Based on preliminary data from Bursa Malaysia which excluded off market deals, the net amount withdrawn by foreign investors on the two trading days amounted to RM504.8 million net, exceeding the RM438.4 million in the preceding week.
“As a result, the year-to- date inflow dipped to RM2.52 billion net,” MIDF Research.
“Nonetheless, foreign and local institutional participation was robust as their average daily trade values (ADTV) stood at RM1.22 billion and RM2.85 billion (the highest in 10 weeks), respectively.”
Malaysia also remained as the largest beneficiary of inflows among the four Asean markets the research arm tracked.
MIDF Research noted that the outflows on these two days extended the foreign selling spree from last week to five days, the longest since February 2018.
“It is noteworthy that Monday recorded the highest outflow which amounted to RM273.6 million net.
“On the eve of GE14, foreign selling activity shrank by RM42.4 million to RM231.2 million net, with the local bourse climbing, boosted by buying activity from the local institutions which have been net buyers for five days straight.”
MIDF Research further noted that this Monday marks the first trading day after the GE14 which witnessed the end of the six-decade rule by Barisan Nasional.
“In the wake of the election sur- prise win by Pakatan Harapan, some level of foreign attrition is bound to occur in the short term amidst the political uncertainties.
“Nonetheless, this could be capped by investors’ perception towards Tun Mahathir, Malaysia’s seventh Prime Minister who has 22 years of experience in leading Malaysia before joining the thenopposition in 2016.
“The new Prime Minister noted that he will focus on addressing concerns over economic and state finances including reducing government debt but not devaluing the ringgit,” the research arm said.
“In the long run, we expect that foreign investors will return to Malaysia as Pakatan Harapan gradually works on its promises made during GE14.”
Tenaga Nasional Bhd registered the highest net money inflow of RM34.74 million last week while Malayan Banking Bhd recorded the second highest net money inflow of RM21.44 million.
Genting Malaysia Bhd saw the third highest net money inflow of RM7.11 million. On outflows, F& N Holdings Bhd saw the largest net money outflow of RM11.26 million last week.
Gamuda Bhd recorded the second largest net money outflow RM2.59 million during the week under review while Axiata Group Bhd registered the third largest net money outflow at RM2.36 million.