Wednesday, February 1

Foreign buyers on Bursa picking up as GE14 looms closer


KUCHING: Analysts are observing a rise in foreign participation on Bursa Malaysia in its daily trade as Malaysia’s 14th General Election (GE14) looms closer.

The increase in foreign participation of total daily trades on Bursa Malaysia could also be attributed to the rising crude oil prices.

In a report, the research arm of Maybank Investment Bank Bhd (Maybank IB Research) opined, “Rising crude oil prices and pre-GE14 positioning were perhaps the draw to Malaysia in April, as foreigners were net sellers in Indonesia, Philippines and Thailand.”

It noted that foreign investors net bought an estimated RM1.5 billion of Malaysia equities in April, after a marginal net sell of RM0.1 billion in March.

On the contrary, it pointed out that domestic institutions and retailers were net sellers in April, at an estimated RM1.1 billion and circa RM0.4 billion respectively.

“Consequently, foreign participation of total daily trades on Bursa Malaysia rose to an estimated 25 per cent in April from 23 per cent in the first quarter of 2018 (1Q18),” the research team added.

It also noted that the total foreign net buy in Malaysia equities were at an estimated RM3.5 billion for January to April 2018 (RM10.6 billion net buy in 2017).

“Foreign holdings end-April should be slightly above end-March’s 24.2 per cent (end-2017: 23.2 per cent),” it said.

“Malaysians will go to the polls for the 14th time (GE14) on May 9. In GE13 on May 5, 2013, there were 13.3 million registered voters of which the turnout was 11.3 million (84.8 per cent). For GE14, 14.9 million have registered to vote for 222 parliamentary seats and 505 state assembly seats,” it noted.

After GE14, it pointed out that there would be two key macro decision/release in May: Bank Negara Malaysia’s (BNM) Monetary Policy Statement on May 10, and 1Q18 GDP release on May 17.

It added that the final two weeks of May would see the peak of corporate results reporting for 1Q18.

Overall, Maybank IB Research maintained its end-2018 KLCI target of 1,880, despite the record high 1,895.2 recorded on April 19, 2018.

“Stronger earnings growth delivery is a catalyst for a re-rating. We estimate 8.4 per cent core earnings growth for our research universe in 2018, continuing on the momentum from 2017 (up 7.3 per cent),” it added.