Foreign investors bought RM138.6m equities in 2 days

KUALA LUMPUR: Foreign investors were net buyers in the equity market, pumping in RM138.6 million on Monday and Thursday alone, compared with RM146.8 million during the previous week.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the inflow of foreign funds was quite impressive despite external uncertainties.

“Perhaps, expectations that the United States Federal Reserve’s (Fed) rate hike would reach a peak of 2.5 per cent may have driven funds from abroad to look at emerging market assets.

“Global prospects were also quite weak based on the Global Purchasing Managers Index for the manufacturing sector which fell to 50.7 points last month from 51.5 points in December last year.”

However, Afzanizam said the US labour market remained strong, following better-than-expected non-farm payroll data last month, coupled with higher wages, which could prompt the Fed to resume monetary tightening measures.

“If that happens, it may have an impact on capital flow and currency markets.”

Phillip Capital Management Malaysia senior vice-president (investment) Datuk Dr Nazri Khan Adam Khan said the small improvement in fund flow indicated that Malaysia was catching up with countries such as Indonesia, the Philippines and Thailand.

He said sentiment remained cautious following headwinds from trade tensions and global growth.

“The government should encourage more foreign investors to invest in the country as this will propel the inflow of foreign funds into our country,” he said.

On the ringgit, Nazri said the local note was expected to trade at 4.00 against the US dollar, boosted by mild buying.

“We stay slightly bullish on the ringgit in anticipation of further losses in the US dollar.”