Thursday, July 7

Forgettable week for equity investments — Analysts

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KUCHING: Foreign investors bought RM128.7 million last week on Bursa Malaysia which represents a significant drop from the RM305.8 million mopped up the week before.

According to MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research), last week’s inflow marked the ninth consecutive week of foreign buying of stocks in the open market on Bursa.

The longest streak of foreign buying since the financial crisis in 2008, was 24 months based on available record.

On a cumulative basis, foreign investors remained net sellers of Malaysian stocks in 2014, but the net outflow as of last Friday had declined to only RM1.6 billion. In 2013, Malaysia reported a net inflow of RM3 billion.

Foreign participation on the local bourse remained moderate but was still among the lowest this year, MIDF Research added. Daily foreign participation rate on Bursa stayed below RM900 million at RM888 million, an improvement over the RM805 million the week before.

The retail market sprang back into some action noted MIDF Research as retail participation jumped to RM749 million, the highest in four weeks although it was still lower than the average of RM846 million for the year.

“Local institutions sold a marginal RM46 million last week,” it said, adding that participation bounced back from its nadir in 2014 with average daily volume of RM1.9 billion, compared with 1.6 billion the week before.

“June has, thus far, been forgettable. As of last Friday, the FBM KLCI and FBM70 had added only 0.7 per cent and 0.9 per cent for the month. It was better than that last year, but over a longer term perspective, the increment was below average.”

In contrast, MIDF Research observed that the FBM Smallcap Index remained on a strong upward trajectory.

After the woeful 0.1 per cent gain in May, the index had bounced back to add 2.5 per cent in June, it added. It is apparent that currently, the momentum still favours the small and midcap counters, although retail investors remained sceptical and on the sideline.

“This is the penultimate week before trading for the second half of 2014 officially kicks off next Tuesday,” it said. “Most of the window dressing activity will happen this week rather than on Monday.

“The practice is that the mark-to-market valuation for many funds is likely to be based on the average volume-weighted price over a few days rather than the price on the last trading day of the
period.”