KUALA LUMPUR: Global funds reacted to the unprecedented outcome of Malaysia’s 14th General Election (GE14) by selling RM2.48 billion net of local equities in the open market (excluding off-market deals) last week.
This is the heaviest weekly foreign selldown in Malaysia since the week ended August 23 2013 which saw a net outflow of RM2.9 billion, said MIDF Research.
The firm, however, is cautiously optimistic that foreign funds will gradually return as polical clarity got clearer.
In its weekly fund flow report today, MIDF Research said foreign investors had been net sellers for 10-straight trading days as of last Friday.
“The first trading day after GE14 saw a net outflow of RM682.6 million net.
Nevertheless, the trading value on Bursa Malaysia was the highest ever recorded on the same day at RM7.3 billion.
Foreign selling on Tuesday then swelled to RM837.3 million net, the largest in a day since early February 2018.
“On Wednesday, foreign outflows tapered to RM320.7 million as investors cheered the post-GE14 reforms which included the reduction of the Goods and Services Tax to zero per cent effective from June 1 in addition to the pardon granted to jailed former deputy prime minister Datuk Seri Anwar Ibrahim,” MIDF Research said.
The FBM KLCI followed suit to settle 0.54 per cent higher at an eight-day trading high of 1,858 points as buying activity by retailers and local funds continued amid renewed optimism, it added.
Foreign investors continued selling on Thursday and Friday to a tune of RM384.4 million net and RM251.2 million net as the surge in US treasury yields during the week crept into minds of investors.
Due to the intense selling pressure, the cumulative net inflow into Malaysia so far this year had been substantially reduced to RM40.2 million from RM2.52 billion before GE14.
“We are cautiously optimistic that this cumulative figure may gradually pick up as more political clarity comes into picture. Despite recording the largest weekly outflow among the four Asean markets we monitor last week, Malaysia is still the major beneficiary of foreign inflows.”
Foreign participation remains strong as the foreign average daily trade value (ADTV) soared by almost 100 per cent to RM2.39 billion, the highest in 24 weeks.
Similarly, participation in the retail and institutional market was robust as their ADTVs reached a level not seen over the past 18 weeks.