Foreign funds remain net sellers of Malaysian equities

  • Business
  • Monday, 08 Jul 2013

KUALA LUMPUR: Foreign funds continued to reduce their stakes of Malaysian equities in the week ended July 5, which was the sixth straight week but the rate of selling seemed to have abated significantly, says MIDF Equities Research.

It said on Monday foreign funds were net sellers of Malaysian equities totaling RM131.90mil but this was a decline from RM335.1mil in the week ended May 31.

"However, the rate of foreign withdrawal from Bursa is abating at a significant rate. The net withdrawal last week was the lowest in 6 weeks. Foreign investors were actually net buyers last Monday and the daily amount sold in the subsequent four days were relatively marginal," it said.

MIDF Research said in the last six weeks, RM4.2bil of foreign money had left the Malaysian equity market. This was 22% of the RM18.8b that had entered the country in 2013, before the exodus began in late May.

"This means that the overhang of foreign liquidity in Malaysia remained high. We estimate that the overhang of foreign liquidity that had entered Bursa since January 2010 to be about RM45.3b. The risk of a "disorderly" withdrawal, therefore, remains high," it said.

The research house said overall volume in the market was still elevated, but the rate was declining rapidly. Foreign participation rate (average daily gross purchase and sale) fell to RM1.0bil, the lowest in 10 weeks. It said this indicated reduced propensity to sell.

As for the retailer players, they were net sellers of RM150mil of equities in the week ended July 5, which was the second consecutive week.

However, local institutional investors mopped up net RM282mil last week, the sixth straight week of buying support. However, it was relatively passive as participation rate fell to RM1.7bil, the lowest in 15 weeks.

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