KUALA LUMPUR: Global funds’ aversion to Malaysian equity continued for the fourth consecutive week, but at a decreasing intensity, and foreign investors sold RM447.4 million last week compared with RM635.8 million the week before, according to MIDF Research.

In his fund flow report yesterday, MIDF Research head Zulkfli Hamzah said foreign investors sold aggressively from last Tuesday to Thursday.

He said the selldown peaked last Wednesday, when an amount of RM255.4 million was offloaded, the 10th-highest in a day this year.

He said it was also the 17th day this year that the net amount sold exceeded RM200 million.

“However, we note that the selldown tapered thereafter, and foreign funds started to nibble on Bursa [Malaysia] again, turning net buyers, albeit marginally, last Friday.

“An indication that the worst of foreign selldown has passed is that the foreign participation rate declined to ‘moderate’ (RM750 million-RM1 billion) from ‘elevated’ (more than RM1 billion) last week. Daily average gross purchase and sale fell to RM952 million from RM1.22 billion,” he said.

Zulkifli said that in contrast, local retail participation rose to its highest in four weeks.

He said the retail average daily gross purchase and sale bounced to RM1.01 billion compared with RM832 million the week before.

Retailers bought marginally at only RM200,000, but it was the second week in a row that they had been net buyers, he said.

“Local institutions supported the market significantly for the second week in a row, mopping up RM447 million, compared with RM617 million the week before.

“Participation rate remained
elevated at RM2.08 billion, slightly higher than the week before,” he said.

Commenting on the region, Zulkifli said globally, risk aversion to equity surged last week, adding that trading was turbulent and the equity market was heading towards the worst September since 2011.

He said the outflow of Asian equity intensified last week, as global funds made an exit for the third week in a row.

Zulkifli said there was substantial withdrawals from Taiwan and South Korea last week.

He said these countries appeared to suffer some fallout as a result of heightened aversion to technology stocks on Wall Street.

However, the overhang of foreign liquidity in these two markets remains exceptionally high, he said.

“Country-specific developments drove money out of emerging Asia equity.

“In India, foreign investors sold stocks related to mining after the court rescinded the rights to coal mines. In Indonesia, the parliament’s decision to scrap local elections drove investors out of contruction-related stocks,” he said.


This article first appeared in The Edge Financial Daily, on September 30, 2014.