Asian markets broadly up

MIDF says foreign investors continue to pump liquidity into stocks listed on Bursa

The cumulative foreign net purchase in 2017 has reached RM10.39bil.

MIDF Research

PETALING JAYA: Asian markets were broadly up yesterday ahead of the US Federal Reserve’s (Fed) twoday meeting to decide on further interest rate hikes.

Many Asian markets reversed their losses from last Friday, after the sudden sell-off in technology stocks in the US market on concerns that they had risen too high and quickly.

Bucking the trend, the FBM KLCI ended 4.45 points lower to 1,784.44 yesterday.

Earlier, the local stock market index was hovering above the 1,790-point level, anchored by gains from CIMB Group Holdings Bhd, Petronas Gas Bhd and Tenaga Nasional Bhd.

Despite a slow start, foreign investors continued to buy Malaysian stocks last week, marking the 18th week of net inflows, according to MIDF Research.

Since the beginning of the year, foreign investments into Bursa Malaysia have reached RM10.4bil, overtaking Thailand, Indonesia and the Philippines.

“The cumulative foreign net purchase in 2017 has reached RM10.39bil, offsetting 35% of the total cumulative net outflow recorded in 2014 to 2016,” MIDF said in a report yesterday.

The ringgit advanced marginally yesterday to 4.2610 against the US dollar, a level last seen eight months ago.

MIDF said that foreign investors remained faithful, as they continued to pump liquidity at a sustained rate into stocks listed on Bursa.

It pointed out that foreigners had bought RM249.8mil net from the open market last week, sustaining their purchase of above RM200mil for the third week running.

Hong Leong Investment Bank (HLIB) Research reckoned that investors would remain on the side- lines ahead of the Fed’s meeting.

“Also, we believe that the profit-taking activities within the tech giants in the United States will take a pause after the recent two-day selldown, and the Dow may trend within the 21,000-21,500 level over the near-term,” it said in a note.

On Monday, shares in stock giants such as Apple, Amazon, Facebook, Google and Microsoft were down, continuing a slide that started last Friday that wiped out billions of dollars, on concerns of technology companies being overvalued.

Aside from the expected interest rate hike in the United States, markets are also anticipating how the Fed would start the process of reducing its balance sheet of US$4.5 trillion after buying bonds in its quantitative-easing programme from the meeting.

HLIB Research expected the upside in the FBM KLCI to be capped at the 1,790-1,800 points.

“We expect the overheated semiconductor rally last week to take a breather over the next few days, following the sell-off in tech stocks on Wall Street,” it said.

Other Asian markets have also gained interest from foreign investors last week, which saw a net inflow of US$578.4mil, said MIDF Research.

Foreign investors were buying stocks in the South Korean and Taiwanese markets, it added.

Meanwhile, in the emerging South-East Asian markets, MIDF said global investors took a mixed view last week – selling stocks in Thailand and Indonesia.