SELL-OFF IN RUBBER GLOVE COUNTERS STIFLES BURSA MALAYSIA TO RECORD NET INFLOW IN MARCH

By Nurul Hanis Izmir

KUALA LUMPUR, April 5 -- If not for the sell-off in the rubber glove counters, stoked by the US Customs and Border Protection (CBP) last Wednesday, Malaysia could have recorded net inflow for month of March, said Bank Islam Malaysia Bhd economist Adam Mohamed Rahim.

He said for the month of March 2021, foreign investors disposed of RM33.7 million net of local equities on the local bourse, the smallest since August 2018, which saw foreign investors selling RM10.0 million of local equities.

Nevertheless the disposal of RM33.7 million net local equities was the 21st consecutive month of foreign net outflows.

“The week started pretty good as foreign investors snapped up RM89.8 million net of local equities on Monday as the Department of Statistics of Malaysia (DOSM) released better-than-expected trade data for February, a 17.6 per cent growth year-on-year.

“The overall sentiment was also upbeat following the news that the containership blocking the Suez Canal was refloated,” he told Bernama.

Adam said international funds continued to acquire local equities on Tuesday but at a slower pace of RM28.7 million net.

He noted that investors also digested the results of the FTSE Russell index review whereby Malaysia retained its membership in the FTSE World Government Bond Index and was removed from the watch list for its potential reclassification of its market accessibility level from “2” to “1”.

“Havoc wreaked Bursa Malaysia on Wednesday as foreign investors dumped RM337.6 million net of local equities, the biggest foreign net outflow in a day since the first trading day of 2021 which saw RM852.5 million net of local equities sold by offshore funds.

“Foreign net selling on Wednesday was prevalent in rubber glove counters, stoked by the declaration by the US Customs and Border Protection that certain disposable gloves manufactured by Top Glove have been  (allegedly) manufactured with the use of convicts, forced or indentured labour,” he said.

As a result, such products will not be permitted to be imported by the US.

Adam said on Thursday, foreign investors made a modest comeback to Bursa Malaysia to buy RM7.0 million net of local equities.

Optimism spilled over to Asian markets, including Malaysia after President Joe Biden presented a US$2.25 trillion US infrastructure plan on Wednesday, setting the stage for a drawn-out battle over his second big economic programme after his pandemic-relief package’s relatively smooth sail through Congress.

International investors upped the ante in the buying activity as they bought RM38.9 million net of local equities on Friday.

 “Rubber glove counters, namely Top Glove regained momentum after the slump on Wednesday as there were no new additional issues surrounding the forced labour (allegedly) discovered but some rectification and verification works are required to be done on the earlier findings.

“Sentiment for rubber glove counters on Friday was sided by a report relating to 25 new rare types of blood clots linked to AstraZeneca Plc’s Covid-19 vaccine which was discovered by the UK government,” he said.

In comparison to its six Asian peers, namely South Korea, Taiwan, the Philippines, Thailand, Indonesia and India monitored, Malaysia has the smallest year-to-date foreign net outflow of US$418.2 million or RM1.7 billion while Taiwan has the year-to-date foreign net outflow of US$11.6 billion.

On the other hand, India has the largest foreign net inflow of US$7.6 billion.

-- BERNAMA