KUALA LUMPUR: The Malaysian equity market has recorded the highest inflow of foreign funds among Southeast Asian countries so far this year, driven by the country's strong economic outlook.
As of March 9, 2018, a total of RM1.9 billion of foreign funds flowed into the local stock market after successfully attracting RM10.8 billion net foreign inflows for the whole of last year.
The net foreign exchange inflow to Bursa Malaysia on a weekly basis this year saw its highest level in the first week of January at RM915.1 million, the biggest weekly inflow since March 2017.
So far this year, the only other Southeast Asian market that has recorded net foreign fund inflows, besides Malaysia, is Vietnam with RM1.6 billion.
The Indonesia, Philippines and Thailand stock markets recorded foreign outflows of funds amounting to RM4.1 billion, RM1.3 billion and RM6.8 billion respectively.
The inflow of foreign funds has provided support for Bursa Malaysia's key benchmark, the FBM KLCI, to stay above 1,800 points.
The ringgit's position has also benefited from the inflow, and remains strong below RM4 compared to the US dollar.
Malaysian Rating Corporation Bhd said portfolio investors moved capital into the Malaysian market to capitalise on the country's economic growth which was projected to be strong this year.
The local rating firm expects inflows of foreign funds to continue in line with the recovery in the region. In fact, the sharp decline in the ringgit after crude oil prices dropped in 2014 also provided investors with the opportunity to benefit from the ringgit's strengthening expectations, it said.
Meanwhile, Fundsupermart Research expects the fundamentals of Malaysia's economy to remain strong and is one of the main reasons to stimulate inflows of foreign funds into the local equity market.
Moving forward, Fundsupermart Research said, private consumption is expected to remain a key driver of the economy with inflation expected to moderate this year, which would help reduce high cost of living pressure and stimulate domestic spending.