PETALING JAYA: An economist has blamed bad policies and political tension for the flight of funds from Bursa Malaysia.
Center for Market Education CEO Carmelo Ferlito said the outlook was likely to remain bleak for some time.
According to MIDF Research, local institutions and foreign investors were net sellers to the tune of RM3.43 billion and RM5.54 billion, respectively. It said local equities were largely supported by retail investors since the beginning of 2021.
Ferlito said bad policymaking mixed with high political tension was pushing investors to look elsewhere for opportunities.
“It is no mystery that Malaysia is not undergoing a good economic, social and political moment,” he told FMT.
“The anti-Covid-19 strategy has been wrong from the beginning and, despite the bad results achieved so far, there is no sign that the government is looking for another approach.
“Besides a lack of confidence in the market, the pulling out is also a sign that investors both local and foreign expect the current situation to last for a while.”
He said the situation was exacerbated by the “business-unfriendly” move of making businesses close for a long time. This would “surely kill even the most viable business in the country”.
Another economist, Barjoyai Bardai of Universiti Tun Abdul Razak, predicted that the Malaysian market would remain bleak for the rest of the year.
“Many analysts, including the rating agencies, are projecting the economy will grow only between 2% and 4% at best this year, and it might get worse next year,” he said.
He told FMT the stock market was supposed to lead the economic cycle at least by two or three years, but was now disturbed by uncertainties, causing investors to take a safe position and wait on the sidelines for the right time to enter the market.
However, he said, this should not cause concern as the market would turn around sooner or later.
“Foreign investors are like a flock of birds just looking for a better opportunity. Right now, we are the second worst market in the region. It does not make sense for them to actually make a stop here.
“The investors know that the market is bound to recover once everything becomes more certain. This applies especially to the political turmoil, vaccination programme and the opening up of the economy.”
He said the lower the market dropped, the more attractive it would be to institutional and foreign investors.
“When the price is right, you’ll see them coming back.” - FMT
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