(EXCLUSIVE) FOREIGN FUNDS RETURN TO BURSA WITH NET INFLOW OF RM247 MLN

By Nurunnasihah Ahmad Rashid and Sharifah Pirdaus Syed Ali

KUALA LUMPUR, Sept 15 -- Bursa Malaysia saw a slight recovery this week, registering a net inflow of foreign funds totalling RM247.1 million from Tuesday to Thursday (Sept 10-12) compared with a foreign net outflow of RM198.0 million in the corresponding three-day period last week.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said foreign investors accounted for 34.68 per cent of the market this week, while local institutions dominated at 45.84 per cent and local retailers’ participation stood at 19.48 per cent.

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However, local institutions turned net sellers on Bursa Malaysia this week, with outflows amounting to RM288.4 million against inflows of RM186.2 million last week, while local retailers remained net buyers, recording inflows of RM41.3 million this week from RM11.9 million last week.

“Such a trend was in tandem with improving prospects on trade negotiations between the US and China expected in October.

“Apart from that, China has announced tariff exemptions on some products imported from the US. Likewise, the US has delayed the implementation of an additional five per cent tariff on imports from China to Oct 15,” he told Bernama.

Meanwhile, Mohd Afzanizam said, the European Central Bank also had reduced the rate on deposit facility by 10 basis points to minus 0.5 per cent and introduced quantitative easing amounting to 20 billion euros per month during the Governing Council's meeting on Thursday.

“In a nutshell, the external environment has been favourable, at least in the immediate term, and this has translated into better sentiment in the markets,” he said.

On Bursa Malaysia's performance, it kicked the week off on a sluggish note following the long weekend, dragged down mainly by the sharp fall of Axiata and Digi shares after the termination of the proposed Axiata-Telenor mega-merger announced on Sept 6. Bursa Malaysia traded below the psychological level of 1,600, undermined by foreign selling. 

However, the FTSE Bursa Malaysia KLCI managed to settle above the 1,600 level Wednesday, boosted by oil and gas counters which staged a strong performance in tandem with the strength shown in global oil prices, said an analyst.

But foreign investors, he said, were shifting away from Malaysia’s financial market following discouraging gross international reserves data, which shrank by 0.4 per cent to US$103.5 billion as of Aug 30, 2019, compared with a month earlier.

On Thursday, Bursa Malaysia ended at its intra-day low, partly on profit-taking amid bearish trend among the major Southeast Asian equity markets on the back of a regional allocation decision made by fund managers to shift away from these markets, he said.

However, last-minute buying lifted Bursa Malaysia to end the week on a positive note, ahead of another long weekend, amid fresh trading cues especially on specific stocks that have been showing earnings growth as well as a few defensive consumer-type stocks.

Meanwhile, Bank Negara Malaysia's decision to maintain the overnight policy rate at 3.00 per cent at its Monetary Policy Committee on Thursday is said to be a good move for the ringgit.

“Lack of rate cuts also translated into the ringgit's strength. The weaknesses in the ringgit has a big impact on consumer spending in Malaysia.   

“It can be seen in the latest import data, which saw a big drop. This shows that the ringgit, which has been weak for months, has an impact on weakening domestic demand. If that continues for too long, it will have an impact on the gross domestic product growth,” he said.

-- BERNAMA