Foreign selling on equities on Bursa Malaysia hit 1.21b

KUALA LUMPUR: Foreign investors have sold off Malaysian equities amounting to RM1.21 billion year-to-date as of last week, marking the sixth consecutive week of outflows with a weekly total of RM336 million.

According to MIDF research, a similar selling streak was observed in mid-2023, spanning 12 straight weeks of foreign net selling. 

"The breakdown of last week's outflows included RM99.4 million on Monday, RM253.4 million on Wednesday, and RM132.7 million on Friday. 

"However, there were net inflows of RM134.3 million on Tuesday and RM15.2 million on Thursday," it said in a note yesterday (April 8).

Among the sectors, property saw the highest net foreign inflows at RM104.4 million, followed by construction at RM36.9 million and healthcare at RM14.6 million. 

Conversely, financial services recorded the highest net foreign outflows at RM417 million, followed by industrial products and services at RM46.0 million and consumer products and services at RM29.9 million.

MIDF said that in contrast, local institutions persisted in their net buying trend for the sixth consecutive week, with a net purchase of RM557.4 million.

It said they only net-sold RM81.3 million on Tuesday but were net buyers for the rest of the week, amounting to RM638.7 million.

"Local retailers maintained their net selling stance on Bursa Malaysia for the fourth straight week, disposing of RM221.4 million net.

"They net sold every day last week and have been net selling for 21 consecutive trading days," it said.

On participation, MIDF said the average daily trading volume declined across all investor classes last week.

Meanwhile, UOB Global Economics & Markets Research said foreign portfolio flows turned negative again in March (RM1.2 billion) after a month of marginal inflows in February (RM0.1 billion). 

It was solely due to the equity outflows (Mar: RM2.9 billion, Feb: RM1.3 billion) that fully outweighed the debt inflows (Mar:RM1.7 billion, Feb: 1.2 billion). 

"This led to a cumulative foreign portfolio outflow of RM5.5 billion in 1Q24 (4Q23: RM0.3 billion, 1Q23: RM9.5 billion), with both debt and equity outflows totaling RM4.6 billion and RM0.9 billion, respectively," said UOB Global Economics & Markets Research.

Reflecting partly a reversal in foreign portfolio flows, Bank Negara Malaysia's (BNM) foreign reserves dropped for the second straight month by US$0.5 billion month-over-month (m/m) to US$113.8 billion as of end-March (end-February: US$0.6 billion m/m to US$114.3 billion).

The latest reserve level has taken into account the quarterly foreign exchange revaluation changes. 

It is sufficient to finance 5.6 months of imports of goods and services and is 1.0 times the total short-term external debt, it said.

"Recent portfolio flows remained in line with our expectations, as we have constantly warned of a bumpy pace due to the repricing risks of Fed rate cuts,China's economic growth outlook, and geopolitical concerns. 

"But in the longer-term view, we remain positive on emerging market (EM) portfolio flows (including Malaysia) in 2024, primarily supported by higher growth in EMs relative to developed economies and the prospects of US Fed rate cuts later in the year amid manageable inflationary pressures," said the research house in a separate note. 

Moreover, the conditions for a sustained US dollar rally are still absent, which continues to affirm our view of an Asia FX recovery (including ringgit) this year, albeit at a more moderate pace than initially anticipated, said the research house.

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