Anxiety as foreign investors continue selling on Bursa

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KUCHING: With foreign investors resuming their exit from Bursa Malaysia last week, the team at MIDF Amanah Investment Bank Bhd (MIDF Research) said its anxiety was not misplaced as the brief respite from foreign selling in the first week of February did not stay.

However, the firm believed the aversion could be partly attributable to the long break ahead, not only in Malaysia, but most markets in the East Asia.

“Last week, foreign investors sold, on a net basis, local equity in the open market (excluding off-market deals) amounted to minus RM677.7 milion net,” it said in its Weekly Fund Flow Report for the week ending Feb 13, 2015.

Foreigners sold every single day during the week.

“The net amount offloaded on Thursday (minus RM357 million) was the third highest in a day this year.”

Last week, MIDF Research observed that sales increased the cumulative net foreign outflow for 2015 to minus RM2.8 billion, adding that the cumulative foreign outflow for the entire 2014 was minus RM6.9 billion.

However, foreign volume remains elevated as foreign participation rate (which consists of daily average gross purchase and sale) was RM1.14 billion last week which is the sixth week in a row that it had exceeded RM1 billion.

“Local institutions supported the market last week, mopping up RM749 million. Participation rate remained strong at RM2.56 billion,” MIDF Research added.

“Local institutions have absorbed RM3.1 billion net so far this year. In 2014, they bought RM8.2 billion net,” it added.

Retailers remained cautious and stayed on the sideline, it observed, whereby retailers sold RM71.2 million last week, which was the fourth straight week of selling.

Participation rate remained moderate at RM877.2 million.

“This is not a healthy condition if one is expecting a pre-New Year rally of the retail stocks,” it said.

On a regional scale, MIDF Research observed that Asian equity remained in the radar screen of global investors as global funds bought Asian equity for the fourth week running.

“Last week, based on provisional data from the exchanges, foreign investors were in aggregate net buyers in the 7 Asian stock markets that we track – India, Taiwan, Korea, Thailand, Indonesia, Philippines and Malaysia.

“However, we note that the rate of money flow to Asia has been declining. Last week’s figure of negative US$1 billion was the third week of decline.

“The only clear and strong beneficiary of foreign money flow based on data in the past few weeks appear to be the Indonesian market. Foreign investors bought US$271 million net of Indonesian stocks last week, the highest since July 2014.

“The prospect for the Indonesian economy is getting better. Last week, the government announced that Indonesia’s 4Q14 current account deficit, a significant turn-off for many investors, had narrowed to US$6.2 billion, or 2.8 per cent of GDP. It was US$7 billion or three per cent of GDP in 3Q14,” it added.