Malaysia records highest net foreign inflow since 2012

MONDAY, FEBRUARY 5 KUALA LUMPUR- Bursa Malaysia

KUALA LUMPUR: Malaysia recorded a net inflow of foreign funds into the equities amounting to RM10.33bil (US$2.36bil) in 2017, the highest annual net inflow since 2012.

According to MIDF Research, the net purchase by foreign funds last year has offset nearly 35% of Bursa Malaysia’s total outflows from 2014 to 2016. This amount is estimated based on net transactions in the open market excluding off-market deals. 

Optimism ran high from early February to June 2017 as foreign funds were net buyers for 18 straight weeks. This was the longest buying streak recorded since 2013 which had 21 weeks in total.

Due to the escalating tensions in the Korean peninsula, foreigners retreated from the bourse within August and November, registering a net outflow of RM1.22bil. However, the significant progress made for the United States’ tax overhaul plan saw foreign funds making a comeback in December 2017 as they acquired RM959.9mil in net value.

“Foreign funds were rather aggressive buyers in 2017 where Bursa Malaysia recorded a net injection in 35 out of 52 weeks of trading during the year.

“The USD2.36b inflow was the highest among the four Southeast-Asian markets that we track. This was the first annual net inflow recorded since the election year of 2013 and the biggest since 2012 which experienced an inflow of US$4.75il net,” stated the research house in its weekly fund flow report.

Going into 2018, MIDF Research projects inflows into Bursa Malaysia’s equities to continue, particularly after the 14th general election.

On possible foreign fund outflows driven by external factors, the research house said that the impact is expected to be minimal.

Bursa Malaysia’s benchmark FTSE Bursa Malaysia KL Composite Index (FBM KLCI) rose by 9.4% in 2017, although it lagged its regional peers mainly due to the pre-election effect.

In the last week of 2017, the index scored its biggest weekly gain since January 2016 at 2.08% closing near 1,800 points. A week before, FBM KLCI was up by only 0.41%.

MIDF Research added that the local bourse has a high potential to track gains in its peers as fundamentals of the Malaysian market remains intact.

The ringgit’s performance-wise, the local note outperformed other currencies in Southeast-Asia with an annual gain of 10.9% to settle at RM4.0465 per US dollar, the biggest since 2010.