Net inflow went below RM1bil for the first time last week
PETALING JAYA: Bursa Malaysia is seeing signs of a softening momentum after weeks of outperformance that saw it reaching its highest level in almost two years, largely due to foreign buyers.
Foreign purchases halved last week, as investors turned cautious on the overall sentiment in the global market, partly affected by the US air strikes in Syria and the meeting between US president Donald Trump and president Xi Jinping of China.
According to MIDF Research, foreign buying dipped below the RM1bil mark to RM645mil for the first time last week, after three weeks of an average of RM1.33bil in net purchases.
Bursa’s leading indicator, the FBM KLCI, has been trading sideways since last week and continued its weak momentum yesterday.
Analysts said that the FBM KLCI is “taking a break” after having been on the uptrend since end-February.
Since the beginning of the year, the FBM KLCI has increased by as much as 6.8% after three years of negative growth. The rise in the FBM KLCI also reflected corporate earnings growth in 2016, which registered about an 8% increase.
“The FBM KLCI is having a hard time remaining above the 1,750-point level and will likely soften this week. We are looking at it hitting the 1,720-point before signs of a rebound in a few weeks,” a chartist said.
The softer local equity market is also in line with key Asian markets.
The benchmark FBM KLCI continued to trend lower yesterday, down marginally 2.20 points or 0.13% to close at 1,739.52 points, with local institutional funds turning net sellers amid softer foreign buyers.
“Albeit slower inflows, foreign investors continued to purchase local equities, while local institutions were taking profits,” said a fund manager, adding that counters such as banking and plantations were among the favourites.
Nonetheless, penny stocks continued their upward trajectory, dominating the top-volume list.
MIDF said that it has been nine straight weeks of foreign buying on Bursa, during which RM6.1bil made its way to Malaysian shores, although the recently ended week was below the RM1bil mark.
“Year-to-date, the cumulative amount is slightly higher at RM6.39bil. The inflow this year has already offset the estimated net outflow of RM3.01bil in 2016,” it said in a report yesterday.
MIDF said Sime Darby Bhd saw the highest net money inflow of RM25.37mil last week. Its share price advanced by 0.43%, outperforming the FBM KLCI which increased by 0.09% during the week under review.
CIMB Group Holdings Bhd recorded the second-highest net money inflow of RM23.78mil.
Meanwhile, Kenanga Investment Bank Research said the primary trend of the KLCI was still upwards.
The research house said in the absence of key catalysts, all eyes would be on the upcoming corporate earnings season for more clues on market direction, as big US banks would be reporting results this week.
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