Malaysian Equity Market

During the week (June 4–10), the FBM KLCI dropped 10.67 points or 0.67% to 1,579.90 points, tracking the downtrend in both the Dow Jones Industrial Average (-0.32%) and the MSCI Emerging Markets Index (-0.34%). Globally, investors reacted mildly to a stronger-than-expected US May 2021 consumer price index (CPI) (vs a market selloff on a similar trend a month ago) as they continued to stand behind the Fed’s conviction that a surge in inflation would be transitory.

Investors also took comfort in a soft US May 2021 job report that supported the Fed’s accommodative policy. Locally, investors turned cautious as political leaders from both sides of the aisle were granted separate audiences by Yang di-pertuan Agong at Istana Negara.

Foreign investors unloaded Rm284.2mil worth of Malaysian equities during the week, pushing the year-to-date net outflow to Rm3.3bil. Local institutional and retail investors continued to dominate the market with a participation rate of 45.5% and 39.2% in June respectively (comparable with 42.4% and 38.1% in May respectively).

Foreign investors remained passive with a participation rate of 15.3% in June (compared with 19.5% in May).

Meanwhile, foreign investors piled into Malaysia Government Securities (MGS) for the 13th straight month with a net inflow of Rm2.4bil in May 2021 (vs Rm4.7bil in April 2021).

Equity trading activities subsided with an average daily value traded (ADVT) of Rm3.8bil in June (vs. Rm3.9bil in May). Similarly, turnover velocity fell to 52.1% in June (vs 54.2% in May).

During the week, five out of 13 sectors in Bursa Malaysia ended in the positive territory. The best performing sector was Transportation and Logistics (+6.8%) buoyed by a steep jump in the share price of a port operator on a privatisation deal. The worst performing sector was Technology (-3.0%) as investors were concerned over restricted operations and supply-chain disruptions amidst a new lockdown.