BURSA OUTSHINES S-E ASIAN PEERS

Malaysia in strong position with cumulative net inflow nearing US$2.5b so far this year, says MIDF Research

MALAYSIA has outpaced most of its Southeast Asian peers in being the beneficiary of net inflow of foreign funds, says MIDF Research.

Despite Indonesia having followed closely between March and May, its trend has been on the reverse of late, it added.

Although the numbers had been tapering in the past month, Malaysia remained in a very strong position, with a cumulative net inflow nearing the US$2.5 billion (RM10.7 billion) mark, said MIDF Research in a note yesterday.

Foreign funds had been net buyers on Bursa Malaysia in 26 out of the 31 trading weeks so far this year, it said.

The aggregate net inflow of foreign funds in the first six months amounted to RM10.17 billion. The cumulative net inflow offsets about 30 per cent of the total net outflow recorded between 2014 and 2016.

Out of the total net inflows in the first half, major beneficiaries consisted of mainly banking, oil and gas, and gaming-related stocks.

Optimism on the banking counters was underpinned by earnings growth, said MIDF Research.

Among the favourites, CIMB Group Holdings Bhd, Malayan Banking Bhd and Public Bank Bhd saw inflows amounting to RM1.7 billion, RM1.43 billion and RM760 million, respectively, between the fourth quarter of last year and June this year.

Since then, their foreign shareholding levels had been on an upward trajectory and should improve further, it noted.

MIDF Research advised investors not to fret over possible downtrends in foreign shareholdings.

“Based on Bursa Malaysia’s data, the percentage of foreign shareholdings based on market capitalisation in the local bourse had climbed 0.7 percentage point to 23 per cent as of June this year compared with 22.3 per cent in December last year.

“While this is arguably still far from the the post-financial crisis high of 25.2 per cent in May 2013, this is not necessary a reason to worry,” it added.

MIDF Research expects the local stock exchange to be on the uptrend, although it keeps its year-end target of 1,830 points for the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI).

“The market is expected to be on the uptrend, albeit at a slower climbing pace than that seen during the first half, underpinned by continuous earnings expansion this year and also for 2018.

“After all, Malaysia is home to the world’s longest bull market,” it said.

Foreigners were net buyers on Bursa Malaysia for 18-straight weeks from February 10 to June 9, the longest streak since the first half of 2013.

As of Wednesday, the benchmark FBM KLCI has gained 8.2 per cent on the back of strong foreign inflows.