KUALA LUMPUR (Jan 5): Malaysia was the biggest loser in 2014 in terms of foreign fund outflow, suffering a net sale of U$2 billion (RM7.06 billion), the the biggest outflow since the 2008 crisis exodus, according to MIDF Research. 

In his weekly fund flow report Monday, MIDF Research head Zulkifli Hamzah said despite the sell down, the 5-year cumulative net purchases by foreign investors still amounted to US$8.8 billion (RM31.06 billion), meaning that the overhang of foreign liquidity in the system was still very high.

He said the FBM KLCI, the best performing Southeast Asian market in 2013, received a heavy knockdown in 2014 as it ended the year at the bottom spot. 

“We believe this privation was brought about by a confluence of factors. Firstly, due to our earlier outperformance, the FBM KLCI was among the most expensive market based on valuation-term in early 2014. 

“Thus in January last year, we forewarned of the possibility “that without favourable earnings revision going forward, the tendency for the market to mean revert may result in FBM KLCI underperforming its peers this year””, he said. 

Zulkifli said that unfortunately, the situation thenceforth was less than favourable as witnessed by the persistent downward earnings revisions pursuant to the past four consecutive reporting seasons. 

“Secondly, our part dependence on oil and gas as an important source of state revenue was dealt a blow in view of the falling crude prices,” he said. 

Reviewing the past year, Zulkifli said that generally, global money flow to Asia was stronger in 2014 compared with that in 2013. 

“However, the flow was uneven and much of it was influenced by country-specific factors.

“By virtue of the size of its market, the biggest gainer in terms of dollar in 2014 was India, which pulled in net US$16.1 billion.

“The biggest gainers, in relative terms, were Indonesia and Taiwan,” he said. 

Zulkilfi said that Taiwan recorded net purchases by foreign investors amounting to US$13.2 billion in 2014, 51% higher compared with that in 2013, and the highest in five years.

He said Indonesia reported a net inflow of US$3.8 billion, the highest since the Global Financial Crisis.

Zulkifli said the most consistent beneficiary of foreign money in the last five years was the Philippines, explaining that the foreign purchases lifted the benchmark Philippines Composite index by a whopping 137% during the five-year.

“The two biggest losers in 2014 were clearly Thailand and Malaysia. Thailand reported a US$1.1 billion outflow in 2014, which was much smaller compared with the US$6.2 billion net foreign sale the year before,” he said.