KUALA LUMPUR: Foreign funds' purchase of Malaysian equities are declining, with the latest data showing they were net buyers of RM138.10mil in the week ended July 26, according to MIDF Equities Research.
It said on Monday foreign funds bought Malaysian equities for the third consecutive week, but the amount was still marginal.
"Foreign funds bought Malaysian equities in the open market (that is excluding off-market deals) last week amounted to net RM138.1mil, lower compared with RM168.3mil the week before," it said.
MIDF Research said foreign investors were selling in the last two days of last week, which it said was understandable given risk aversion ahead of what could be a game changing week in the US with the FOMC meeting on Tuesday and Wednesday and many important economic statistics scheduled to be released this week.
It cautioned that the selling could persist on Monday onwards.
"As of last Friday, the cumulative net foreign purchase of Malaysian equity amounted to +US$5.0bil, based on transactions in the open market. The corresponding figures for Thailand and Indonesia remained in the negative territory, at –US$2.43b and –US$0.47b respectively.
"In terms of participation, foreign investors continued to withdraw from the market. Last week, foreign participation rate (average daily gross purchase and sale) was only RM808mil, the lowest in 22 weeks.
MIDF Research pointed out local investors also pulled back from the market, offloading RM127.9bil last week. After surging to RM1.22bil the week before, retail participation rate fell back to below RM1bil at RM989mil.
"We expect the retail market, which has been buoyant after the trough at the end of June, to take a breather in this short term," it said.
Local institutions continued to support the market last week with participation rate at RM2.0bil. It was the 10th week this year that the participation rate surpassed the RM2bil mark.
"We expect local institutions to accumulate passively this week," said the research house.
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