Foreign funds net sellers on Bursa Malaysia for fifth consecutive week

Chartists have mixed views on small-cap stocks and some point to technical indicators as showing an overbought indicator on some 90% of the small-cap stocks on Bursa Malaysia.

KUALA LUMPUR: Foreign funds disposed equities listed on Bursa Malaysia for the fifth week running, the longest selling binge so far this year, MIDF Research said.

In its Fund Flow Report for the week ended October 20, 2017, the research house said foreign investors sold RM71.4mil net, higher than the RM54.2mil net sell-off recorded in the preceding week.

It said on Monday that the estimates made were based on transactions in the open market, which excluded off market deals. 

During the four-day trading week, foreign selling occurred on each day, with Tuesday recording the highest attrition for the week amounting to RM29.1mil net.

This was as investors shifted to the sidelines to seek cover before the Deepavali holiday on Wednesday, the research house said. 

As the foreign net outflow persisted until Friday, the FBM KLCI took cue, resuming its gradual descent to end the week at 1,741 points, the lowest since April 20 after starting the week at a closing level of 1,754 points.

“It seems that the local market is showing a muted response while markets elsewhere are showing a bullish trend amid global developments such as President Trump’s tax reform progress, commendable earnings on Wall Street and upbeat Chinese economic data. 

“We note that although the foreign selling in Malaysia was in conformity with its Southeast Asian peers, the benchmark index in the respective peers tend to be more resilient as compared to Malaysia,” the research house said.

The cumulative net foreign inflow into shares listed on Bursa as of last week currently stands at RM9.40bil. 

Nevertheless, the cumulative amount still offsets approximately 30% of the total net outflows recorded in the past three years, the research house noted.

MIDF Research added that foreign participation rebounded strongly as the foreign average daily trade value (ADTV) surged by a staggering 60% to exceed the RM1bil level at RM1.27b, the third highest weekly amount for the year.

On the other hand, the retail market was relatively muted as the retail ADTV was slightly unchanged, only declining by 0.04% to RM995.3mil.