KUALA LUMPUR: Malaysia recorded net portfolio outflows of RM700 million in April compared to RM1.2 billion in March, due to smaller net foreign purchases of Malaysian debt securities and further net foreign selling of equities at RM1.3 billion.
UOB Research noted this brought cumulative foreign portfolio, equities, and bond outflows to RM6.2 billion from January to April, with debt outflows totaling RM4 billion and equity outflows amounting to RM2.2 billion.
This is compared to net portfolio inflows of RM10.8 billion in the same period last year.
Bank Negara Malaysia's (BNM) foreign reserves fell for the third straight month by US$1 billion month-on-month to US$112.8 billion as of April.
"It is sufficient to finance 5.5 months of imports of goods and services and is 1.0 times the total short-term external debt. The import coverage ratio is comfortably above the generally accepted 'rule of thumb' adequacy threshold of three months," it said in a note.
It added that portfolio flows have been bumpy, oscillating around expectations of the US Federal Reserve's (Fed) next move.
Despite net portfolio outflows in March and April, as well as the ringgit's weakness, the firm noted domestic equity markets performed well as Bursa's market capitalisation and benchmark index rose to record highs this month.
"We reckon investor sentiment is supported by inflows into China and emerging market equities, especially if the China stimulus meets market expectations. US Fed Chair Powell's latest remarks that US monetary policy is sufficiently restrictive, thus ruling out further hikes and softer US labour market data, pushed markets to price back two rate cuts this year.
"Domestic markets also appear to be buoyed by signs of macro-recovery in the first quarter of 2024, alongside the positive news flow of incoming foreign direct investments, a pipeline of infrastructure projects, and the rollout of investment plans amid the repatriation of funds by government linked investment companies (GLICs)."