PETALING JAYA: Analysts reckon that the current buying spree by foreigners on Bursa Malaysia is a good sign, and that the decline of the FBM KLCI is not too concerning.
Rakuten Trade head of equity sales Vincent Lau said the buying pattern was a good sign indicating a resurgence of foreign inflow into the local market.
“The ringgit at this level also makes it more attractive for foreign funds to enter into our market,” he told StarBiz.
The ringgit saw a weekly depreciation by about 0.8% against the US dollar to close at 4.4777 last Friday.
MIDF Research said the net buyers of Asian equities continued to be foreign investors for the fifth consecutive week.
“Based on the provisional aggregate data for the seven Asian exchanges that we track, investors classified as ‘foreign’ bought US$3.58bil (RM16bil) net last week, more than double the amount recorded in the week prior, which was US$1.37bil (RM6.1bil).
“Out of the 33 trading weeks so far in 2022, there have been 20 weeks of net selling and 13 weeks of net buying,” it said in a recent report.
Trident Analytics chief research officer Peter Lim Tze Cheng said Malaysia remains attractive to foreign investors, given the country’s strong economic fundamentals.
“Malaysia’s recent gross domestic product has fared better than other countries in the region. The palm oil and crude oil industries have benefited the country substantially.
“Moreover, while inflation still persists in Malaysia, subsidies have cushioned the impact to a large extent. These are the factors that could have driven foreign interests into our market,” he said.
MIDF Research noted that for the week ended Aug 19, 2022, there was a net inflow of RM615.5mil into Malaysia, which was 36.3% higher than the RM451.7mil that they had net bought in the previous week.
“Last week saw net buying activities by the foreigners for every trading day.
“The amount of net inflows recorded was RM120.4mil on Monday, RM163.9mil on Tuesday, RM153.3mil on Wednesday and RM132.7mil on Thursday.
“Friday was also a net buying day, albeit at a lower rate of RM45.2mil,” said MIDF Research.
Moreover, while local institutions continue to be net sellers with a total net weekly outflow of RM675.9mil in that period, local retailers remained as net buyers for the second consecutive week, posting a total net inflow of RM60.4mil.
“Tuesday saw the highest net money outflow of RM193.1mil. To note, local institutions have been net sellers for 13th consecutive day since the week ended August 3, 2022.
“On the other hand, local retailers were net buyers from Monday to Wednesday but turned net sellers on Thursday and Friday,” said MIDF Research.
Lim maintained that while market sentiment was bearish, it is not too concerning as Malaysia is not alone in the downward trend.
“Market sentiment at this point usually signals that we are either coming to an end or at the end of a bearish market.
“Generally, the market is quite cheap now and valuation appears to be more attractive at this juncture,” he said.
Lau is of the view that the upcoming budget and ongoing earnings results will be the catalysts for trading activities on Bursa Malaysia.
“For the past six months, volume has slowed down. However, volume has begun to pick up in August and market sentiment has also been improving.
“Overall, I think people are still cautious and factors like inflation concerns and interest rates are stopping them from buying aggressively.
“With that said, the catalyst for trading in Bursa Malaysia would be the upcoming budget and US Federal Reserve rates,” he said.
