Intensified foreign selling seen on Bursa Malaysia

Market sentiment improved slightly last Friday, following BNM’s 3Q GDP announcement


Foreign selling of shares on Bursa Malaysia intensified to net RM297.1 million last week, well above the past six-week average that did not exceed RM100 million net.

An MIDF Research report yesterday noted the estimates were based on transactions in the open market and excluded off-market deals.

“Foreign investors were in a selling mode until the week ended, with last Thursday recording the highest amount sold at US$282.1 million (RM1.17 billion) net,” the investment bank report stated.

The heavy foreign selling last Thursday saw the FTSE Bursa Malaysia KLCI close at an eightmonth low of 1,718 points ahead of the US House of Representatives’ vote for a tax cut bill.

Market sentiment improved slightly last Friday, following the announcement of strong third-quarter (3Q) gross domestic product (GDP) growth figure of 6.2%.

Fundflow on Bursa Malaysia seems to have no correlation to regional markets, despite sustained positive newsflow.

International investors continued to enter Asian markets at a stronger pace last week, extending their buying streak to six uninterrupted weeks, MIDF noted.

The provisional aggregate data — from the seven major Asian exchanges that the investment bank tracks — saw investors classified as “foreign” acquiring US$1.19 billion net worth of equity last week.

The news that Bank Negara Malaysia’s international reserves rose further at the end of October to US$101.5 billion from US$101.4 billion a fortnight earlier did not help, nor did the ringgit rise of 0.74% for the week to a year-high of RM4.16 against the greenback.

MIDF said by virtue of the intense foreign selling last week, the cumulative year-to-date (YTD) inflow substantially decreased to RM9 billion from RM9.31 billion in the week before.

“The YTD inflow still offsets 31% of the total net outflow from 2014 to 2016,” it noted.

Foreign participation was back on its feet as the foreign average daily trade value (ADTV) surged by 27% to RM1.13 billion after three weeks of staying below the RM1 billion mark.

In contrast, retail ADTV decreased by 8% to settle below the RM1 billion level at RM957 million. On money inflows, CIMB Group Holdings Bhd saw the highest net money inflow of RM12.11 million last week — despite its share price easing on negative sentiment.

The net money inflow amid retreating share price may indicate a ‘Buy’ on weakness stance among some investors, MIDF stated.

Genting Plantations Bhd saw the second-highest net money inflow of RM5.91 million, followed by Heineken Malaysia Bhd with a net inflow of RM4.07 million.

Investor money left Public Bank Bhd, which saw the largest net money outflow of RM25.62 million last week.

The lender was tacked closely by Petronas Chemicals Group Bhd, which saw net money outflow of RM24.16 million during the week under review.

Power utility Tenaga Nasional Bhd was the third-largest company to see net money outflow at RM16.89 million over the period.

South-East Asian markets were also hit by foreign selling across the board last week despite stronger GDP numbers with foreign funds continued to flee Thailand for the fifth week running as RM760.45 million was sold off.

Foreign investors were net buyers of the nation’s bonds after four weeks of hesitation, while currency wise, the Thai baht settled at a 30-month high of US dollar/32.82 baht — in line with regional peers caused by the weakness of the greenback as the dollar index slipped by 0.77% on a weekly basis.

Foreign selling in Manila, the Philippines, also picked up last week as foreign investors sold RM244.34 million net in comparison to RM3.11 million net the week before.

“Foreign funds shrugged off the nation’s 6.9% year-on-year GDP growth in the 3Q this year as the mood was disturbed by weaker remittances by overseas Filipino workers, which decreased by 8.3% to RM9.1 billion in September,” MIDF noted.

The peso has benefitted from the solid GDP growth, appreciating by 0.59 for the week to US dollar/50.953 pesos.

In Jakarta, Indonesia, foreign attrition hit the 20-week mark with RM14.28 billion worth of foreign funds having exited the country.

“Despite the persistent foreign selling, the Jakarta Composite Index has recorded a high of 6,085 points with the help of banking stocks like Bank Mandiri and Bank Negara Indonesia, which rallied after the central bank of Indonesia decided to maintain the key interest rate at 4.25%.

“This is to maintain financial stability while anticipating a US rate hike in December,” it stated.

The rupiah was little changed, only gaining 0.09% against the greenback to settle at a one-week high of US dollar/ 13,531 rupiah.