PETALING JAYA: Bursa Malaysia continued to see net outflow of funds last week, albeit at a slower pace, said MIDF Research in a report yesterday.
“Local institutions turned into net sellers again last week after net buying for two consecutive weeks, but at a marginal pace of RM7.9mil,” it said.
The only days that saw inflows from local institutions were on Wednesday and Friday, to the tune of RM146.1mil and RM20.3mil, respectively.
Petronas Chemicals Group Bhd
registered the highest net money inflow of RM9.69mil for the past week. However, its share price declined by 2.84%, underperforming the local bourse, which saw a weekly decline of 1.38%.
“It is worth noting that net money inflow amidst a retreating share price may indicate a buy on weakness strategy among some investors,” the research house said.
Public Bank Bhd and CIMB Group Holdings Bhd recorded an inflow of RM5.01mil and RM4.23mil while their stock prices saw a decline of 1.34% and 0.41%, respectively, outperforming the local bourse.
Meanwhile, Sime Darby Plantation Bhd had the largest net money outflow of RM3.58mil last week. Its stock price dropped 5.38%, underperforming the market benchmark.
Foreign investors continued to net sell Asian equities last week, however, the pace was slower, nearly halved from net selling the previous week.
“Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as “foreign” net sold US$4.29bil last week, in comparison with US$7.67bil that they net sold the previous week,” it said, adding that all seven exchanges recorded net foreign outflows for last week,” it added.
Foreign funds left Thailand, Indonesia, the Philippines and India every trading day last week.
Market sentiments improved on the back of easing concerns over inflation as most indices recorded gains. Only five out of 16 major indices tracked by MIDF Research recorded losses last week.
The five indices include South Korea’s KOSPI (minus 3.05%), Taiwan’s TWSE (minus 2.16%), FBM KLCI (minus 1.38%), Philippines’ PSEi (minus 1.80%) and German’s DAX 40 (minus 0.06%).
At the end of last week, main indices on the Wall Street reaped gains as investors speculated that the US Federal Reserve (Fed) may not have to be as aggressive about the interest rate hikes.
However, the International Monetary Fund slashed its US gross domestic product (GDP) forecast to plus 2.9% in 2022 (previously plus 3.7%) and plus 1.7% in 2023 (previously plus 2.3%), as they believe the Fed’s aggressive rate hikes may cool demand, but is expecting the US to narrowly avoid a recession.
“After battling with the Russia-Ukraine crisis and lockdowns in China, it was said that further negative shocks to the economy could push the US into a recession, but it would likely be short and shallow with a modest rise in unemployment, similar to the US recession back in 2001,” MIDF Research said in its fund flow report.
The S&P Global Manufacturing PMI in June 2022 missed market expectations of 56 by a wide margin after plunging to 52.4 from 57 in the previous month, caused by lower production and a decrease in orders, reflecting diminishing customer demand which could be attributed to inflation concerns.
US economic growth is said to have slowed sharply in June 2022, with deteriorating forward-looking indicators signalling an economic contraction in the third quarter of this year.
The research house expects US domestic demand to trend lower due to high inflationary pressure and higher borrowing costs as the Fed continues to aggressively tighten its monetary policy.
Meanwhile, in the United Kingdom, the Office for National Statistics noted that Britain’s inflation rate hit a record 40-year high of 9.1% in May-22, up slightly from 9% in the month prior, mainly driven by food and petrol prices.
“The increase was in line with analysts’ expectations and it signals no quick end to the cost-of-living crunch,” the research house said, adding that the Bank of England had warned that inflation could hit 11% in October when the cap on domestic energy bills is lifted.
Previously, the Bank of England had raised its interest rate to its 13-year high at 1.25%.
“Our economists expect inflation to remain elevated, while the UK’s economic performance is expected to be weighed down by Brexit concerns and higher borrowing costs,” the research house added.
Commenting on China’s stocks, MIDF Research said it closed the week at their highest level since March, gaining for a fourth straight week following the China central bank decision to increase the injection of liquidity into the banking system through open market operations, as demand for cash at the end of the first half of this year started to pick up.
Malaysia’s core consumer price index rose by 2.4% year-on-year (y-o-y) in May 2022, driven by strengthening domestic demand.
This was in line with the jobless rate which fell to a new pandemic low of 3.9% in April 2022.
Non-food inflation rose by 1.7% y-o-y, while food inflation hit more than a decade high after climbing 5.2% y-o-y.
MIDF Research expects food price to grow by 4.5% (previously 3.5%) this year, supported by the removal of subsidies on selected food items, among other factors.
