Foreign funds return to the local bourse

  • Business
  • Tuesday, 09 Jul 2019

CIMB Research's top three picks are Axiata, Dialog and Malaysia Airports.

PETALING JAYA: Shares on Bursa Malaysia retreated yesterday in line with regional markets, as the prospects of faster rate cuts by the Federal Reserve in the United States dimmed.

This was in light of the strong US data last Friday that reduced market expectations of rate cuts in the US at its next meeting this month.

Yesterday, the FBM KLCI closed 4.89 points or 0.29% lower at 1,677.64. Other key markets in Asia were also in the red, including Japan’s Nikkei 225 which closed down 0.98%, while South Korea’s Kospi fell 2.2%.

Meanwhile, in China, the Shanghai Stock Exchange Composite fell 2.58%, and Hong Kong’s Hang Seng declined 1.54%.

UOB Malaysia Research pointed out that foreign flows in Malaysia’s debt and stock markets had reversed in June, following two straight months of outflows in April-May due to the escalating trade war between the US and China.

The research house said foreign flows into the local bond market rose to RM6.6bil and RM135mil in the stock market.

“The turnaround was in tune with the dovish shift by major central banks which revived the hunt for yields. In June, the ringgit strengthened by 1.3% against the US dollar to 4.14,” it said in a report yesterday.

UOB said local stocks saw four straight months of net selling, bringing the year to date of foreign equity outflows to RM4.7bil compared to RM6.8bil in the same period a year earlier.

Nonetheless, the local stocks saw more foreign inflows last week with more than RM230mil net of local stocks being bought by investors, according to MIDF Research.

“Last week’s foreign net inflow brings the year-to-date foreign net outflow from Malaysia to RM4.43bil.

“Meanwhile, the other six Asian markets we monitor - South Korea, Thailand, Indonesia, India, Taiwan and the Philippines - have seen a foreign net inflow so far for the year,” it said in a report yesterday.

MIDF Research said last Monday that foreign investors snapped up RM114.38mil net of local stocks due to the agreement between the US and China to resume trade negotiations during the G20 summit in the preceding week.

However, it said the tables were turned last Thursday and Friday as foreign funds took out RM17.4mil and RM23.3mil net of local equities, respectively, as investors locked in gains while economic data showed that Malaysia’s export growth had doubled to 2.5% year-on-year in May 2019 from 1.1% y-o-y in April 2019.

It said MALAYAN BANKING BHD (Maybank) registered the highest net money inflow of RM7.69mil last week, followed by CIMB GROUP HOLDINGS BHD and PETRONAS CHEMICALS GROUP BHD.

Maybank’s share price increased 1.01% last week, outperforming the local bourse which had a 0.62% weekly gain, MIDF Research added.

Meanwhile, PUBLIC BANK BHD, Sime Darby Bhd and Petronas Dagangan Bhd saw the highest net outflow of funds last week.

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