Foreign investors turned net sellers last week
KUALA LUMPUR: Foreign funds turned net sellers as of Thursday, with an outflow of RM44.1 million compared with an inflow of RM3.4 million in the previous week.
The optimism from the United States and China’s agreement to roll back tariffs on each other’s goods waned following reports that it was opposed by US President Donald Trump’s advisers.
“From past experiences, we know that the outcome of the trade discussions can be very fluid. So, investors want to wait for more convincing evidence,” said Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid.
He said Bank Negara Malaysia’s decision to keep the Overnight Policy Rate at three per cent had increased the country’s attractiveness in terms of investment return, as evidenced by the appreciating ringgit against the US dollar.
“The central bank’s decision has led to a widening interest rate differential with the US, at about 125 to 150 basis points. This implies that investment returns in the ringgit would be higher than the US asset.”
Afzanizam said investors would be monitoring companies’ third-quarter financial results.
“So, I expect the FTSE Bursa Malaysia KLCI to move rangebound (this week).”
At Friday’s close, the ringgit was quoted at 4.1310/1360 against the greenback from 4.1640/1670 the week before.
Afzanizam also said Bank Negara’s cash transaction limit to be imposed starting next year was not expected to impact fund flow.
“It should be good for e-commerce players since there will be an urgent need for e-commerce solutions,” he said.