Lower foreign net selling of RM324m last week

 

Foreign investors sold RM324.0 million net of local equities last week compared to the disposal of RM499.3 million net in the preceding week, said Bank Islam Malaysia Bhd economist Adam Mohamed Rahim.

According to him, foreign investors began last week on a sluggish note as they disposed of RM25.7 million net of local equities on Monday in the absence of any major catalyst while the implementation of the enhanced movement control order (MCO) dragged overall investor sentiment.

On Tuesday, the pace of foreign net selling was little changed at RM23.0 million, he said.

“The latest Organisation of the Petroleum Exporting Countries (Opec) meeting led to no deals to increase production from August due to United Arab Emirates (UAE)'s dissatisfaction on the output levels which they believed were supposed to be higher for them,” he told Bernama.

Adam said the absence of a deal to increase output beginning August would cause tightness in the oil supply and boost oil prices.

The momentum at which foreign investors were disposing local equities accelerated to RM104.3 million net on Wednesday, he pointed out.

“Perhaps news of rubber glove makers halting operations during the enhanced MCO probably spooked some investors regarding the prospects of the nation’s rubber glove industry,” he said.

Nevertheless, the encouraging number of daily vaccinations recorded on Tuesday, July 6, was not enough to boost sentiment as the number of new daily Covid-19 cases remained high at above 7,000 cases, he said.

“The level of foreign net outflow increased further to RM199.5 million net on Thursday, the highest in six trading days,” he said, adding that the sell-off was sparked by a new viral wave of infections in Asia.

On the monetary policy front, he said with Bank Negara Malaysia maintaining the Overnight Policy Rate (OPR) at 1.75 percent, which was within market expectations, the banking counters were impacted more by the jitters of the pandemic rather than the unchanged OPR which was supposed to support the banking sector in terms of net income margin preservation.

Meanwhile, he said the Bursa Malaysia Energy Index was the biggest loser among sectoral indexes as the oil price remained under pressure amid dampened demand prospects following the latest wave of infections in Asia.

“Friday saw a modest return of foreign investors to Bursa as they snapped up RM28.5 million net of local equities, snapping the foreign net selling streak which lasted for almost three weeks,” he said.

Likewise, the FTSE Bursa Malaysia KLCI (FBM KLCI) closed higher at 1,520.6 after Thursday’s 1.4 percent drop.

“However, fears from the virus still conquered the sentiment with the latest number of daily cases reaching 9,180 cases on July 9,” he said.

As such, Adam said, glove counters under the benchmark index such as Hartalega and Top Glove advanced higher to the tune of 1.6 percent and 2.7 percent respectively; and with this, the Bursa Malaysia Healthcare Index was the biggest gainer among the sectoral indexes, ending 2.1 percent higher.

“On a month-to-date basis, July has recorded RM434.8 million worth of net foreign outflow in the equity market.

“Meanwhile, on a year-to-date basis, foreign investors have taken out RM4.6 billion net from Malaysia,” he added.

- Bernama