Malaysia Equity Market

During the week (May 29-June 4), the FBM KLCI added 104.34 pt or 7.16% to 1,561.84 pt, which was fairly consistent with the MSCI Emerging Markets Index that gained 6.85% during the same period. Globally, investors bet on a quick reopening of the economy while shrugging off the violent protests in cities across the United States and the escalating Us-china tensions. Locally, investors chased up glove, tourism-related and banking stocks. In particular, glove stocks experienced heightened volatility as certain brokers in town imposed credit tightening to curb excessive speculation.

Despite the buoyant market performance, foreign investors remained net sellers in the local market. Thus far in June (up to June 4), foreign investors had sold Rm1bil worth of Malaysian equities, bringing the YTD net outflow to Rm14.3bil. On a brighter note, the selling was well absorbed by local institutional and retail investors, with a participation rate of 47.9% (vs 45.8% in May) and 39.1% (vs 36.8% in May) respectively. Meanwhile, as foreign investors took a back seat, their participation rate fell to 13.0% (vs 17.5% in May).

Similarly, foreign investors sold Rm400mil worth of Malaysia Government Securities (MGS) in April (the latest available number), after peaking at Rm12.5bil in March. YTD, the net MGS outflow was Rm16.7bil.

On the back of a buoyant market, Bursa Malaysia’s average daily value traded of on-market trades surged to Rm6.5bil in June (vs Rm4.3bil in May) while turnover velocity increased to 101% (vs 70% in May).

During the week, 12 out of 13 sectors tracked by Bursa Malaysia recorded gains. The top performing sector was Financial Services (+12.1%), boosted by bargain hunting as value had emerged after the persistent selloff for months. Meanwhile, the worst performing sector was Telecommunications & Media (-2.2%) dragged down by the uncertainty surrounding the 5G spectrum allocation.

In the coming week, investors will keep a close eye on:

(1) China trade balance (May) on June 7;

(2) US Federal Reserve’s rate decision on June 10;

(3) US Consumer Price Index (May) on June 10;

(4) Malaysia Industrial Production Index (April) on 11 June; and

(5) Malaysia Retail Sales (April) on June12.

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