Net foreign fund outflow eases to RM394.34m

Foreign investors continued to exit Bursa Malaysia for the May 18-21 period, recording a total net outflow of RM394.34 million, as the country entered the third week of its conditional movement control order (MCO) enforcement amidst the Covid-19 pandemic.

The amount was lower compared with two consecutive weeks previously, on May 12-14 and May 4-7, which recorded RM734.18 million and RM736.28 million, respectively, of foreign net selling.

An analyst told Bernama that the decline in value of foreign disposals for the week under review, might have been a result of the conditional MCO implementation, which allows the economy to gradually reopen, and had progressively helped in boosting the country’s economy and rebuild consumers’ as well as investors’ confidence.

“Perhaps, going forward, we will see international funds making a comeback into Bursa Malaysia if the spread of Covid-19 remains contained and healthcare capacity remains robust,” he said.

The conditional MCO was announced by the Prime Minister Muhyiddin Yassin, under which most economic and social activities are allowed to operate starting from May 4, following positive results from two to six strategies to combat Covid-19 - strict measures to contain the outbreak and building resilience through the Prihatin Rakyat Economic Stimulus Package.

On May 1, Muhyiddin said Malaysia was losing an estimated RM2.4 billion a day due to the MCO, with total losses estimated at around RM63 billion then.

Meanwhile, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said average foreign fund participation stood at 14.59 percent during the first four days of the week compared with 15.86 percent in the corresponding period last week.

“Local institutions recorded a lower net buy of RM389.29 million between May 18 and May 21 compared with RM611.27 million previously, while local retail investors’ net buy this week eased to RM5.04 million from RM122.91 million before,” he told Bernama.

He noted that the FTSE Bursa Malaysia KLCI (FBM KLCI) stayed above the 1,400-point level this week, however, the benchmark index fell by 15.35 points last Friday to close at 1,436.76, in sync with the decline in major indices in Asia and the United States (US).

“The gradual reopening of the economy, as well as positive developments on Covid-19 vaccines, appear to have lent some support to the market.

“Nonetheless, economic numbers continue to remain weak, alongside the potential standoff between the US and China over the latest security law in Hong Kong,” he added.

Mohd Afzanizam said China was seen exerting more control over Hong Kong and this has led negative reaction from the US lawmakers.

“Prior to this, constant criticism by the US officials on the origination of the pandemic from China could jeopardise the bilateral relations between the two countries.

“It’s a bit of a tug of war between optimism on the reopening of the economy and geopolitical risks, and to some degree, the intermittent rise in new infection cases as well as weak economic data that would result in market sentiments to remain guarded,” he said.

As such, he said market sentiments were expected to be cautious next week, and also following the holiday-shortened week next week which will mean less trading volume on the bourse.

“Perhaps, the FBM KLCI is expected to be in range bound mode in the immediate term,” he added.

Bursa Malaysia Bhd and its subsidiaries will be closed on Monday and Tuesday in lieu of the Hari Raya Aidilfitri celebration today. Trading will resume on Wednesday, May 27.

Throughout the week, the market traded mostly higher, with trading volume reaching an all-time high of 11.21 billion units, supported by an overwhelming buying interest from retail participants amid the lower Overnight Policy Rate of 2.0 percent.

On Monday last week, the Yang di-Pertuan Agong Sultan Abdullah Sultan Ahmad Shah, during his royal address at the opening of the third term of the 14th Parliament, had called on the government to look for ways to help companies and businesses affected by the Covid-19 pandemic.

His Majesty expressed confidence, saying that with good cooperation and cohesion, the challenges faced will be resolved together.

The King also called on the government to continue to simplify business processes to enhance investment activities, including the need to update existing laws, approval processes and incentives.

His Majesty said the government would continue to formulate, introduce and implement various programmes and initiatives to spur economic activities to improve the people's income and well-being, and in this regard, the Shared Prosperity Vision 2030 will be the catalyst for the nation's development direction.

- Bernama