Foreign investors sell RM212.1m net in local equities

KUALA LUMPUR: International investors disposed of RM212.1 million worth of local equities from July 6 to 9, down from the net outflow of RM339.4 million in the whole of the previous week.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said Bursa Malaysia started last week on a positive note as foreign funds made a modest return, acquiring RM79.9 million net of local equities last Monday, effectively snapping the 13-day selling spree.

The FTSE Bursa Malaysia KLCI (FBM KLCI) settled 1.6 per cent higher at 1,576.90 points on the same day, the biggest one-day gain in more than a month.

“The rally in the FBM KLCI last Monday was in line with other regional bourses, which picked up steam as investors were anticipating a revival in global economic growth supported by the rebound in Chinese economic activity,” added Adam.

He said the tide reversed last Tuesday as foreign investors dumped RM289.7 million net of stocks, the largest foreign outflow on a single day since early last month.

Last Tuesday’s heavy foreign net selling coincided with FBM KLCI’s 0.7 per cent drop after Bank Negara Malaysia’s decision to cut the Overnight Policy Rate by 25 basis points to 1.75 per cent, a record low since the floor was set in 2004.

Adam said positivity returned to the local market as foreign investors mopped up RM229.1 million worth of local equities last Wednesday, lifting the FBM KLCI to its highest close since late January of 1,583.50 points.

“Although there was fear of a second wave of the pandemic, the market was supported by interest in glove makers, which would benefit more from their capacity expansion plans,” said Adam.

He said the mood turned sombre last Thursday as international investors sold RM231.5 million net of local equities with the absence of a new catalyst.

“Despite the sell-off, the local bourse declined by less than 0.1 per cent to settle at 1,583.25 points on the same day, partly buoyed by the Industrial Production Index rising 18.2 per cent month-on-month in May amid the resumption of business activities.”

Malaysia has the second-highest foreign net outflow of RM16.74 billion year-to-date in Asean member countries after Thailand.

Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift said the local stock market saw stronger participation from retail investors recently compared to a year ago, particularly in cash investment.

“They’ve not been borrowing to invest, which showed reallocation from lower-yielding investments back to the stock market.”

On Friday, the Securities Commission and Bursa Malaysia announced the temporary revisions of the existing market management and control mechanisms, such as circuit breakers, to provide added stability and confidence in the marketplace.

The revised mechanisms will apply from July 20 to Jan 18 next year.

Trading will be halted for the rest of the day as soon as the index falls by an aggregate of or more than 15 per cent of the previous market day’s closing index.

Despite the sell-off, the local bourse declined by less than 0.1 per cent to settle at 1,583.25 points on the same day...