KLCI gets boost from local investor buying


The new policy trajectory to strengthen the country’s financial health amid a corporate purge at government-linked companies is drawing investors back into the local equity market.

Analysts believe investor sentiment has started to pick up as the present government is leading towards a more transparent direction.

The FTSE Bursa Malaysia KLCI (FBM KLCI) gained 21.99 points, or 1.25%, to close at 1,777.13 yesterday on local institutional and retail buying amid easing in foreign selling.

News of the resignation of the central bank governor and major corporate figures failed to damp sentiment. Investors instead put fresh money into Astro Malaysia Holdings Bhd and banking stocks like Public Bank Bhd, CIMB Group Holdings Bhd, Hong Leong Financial Group Bhd (HLFG)and RHB Bank Bhd.

Astro closed 23 sen higher at RM1.83, while Public Bank rose 98 sen to RM25. HLFG increased 62 sen to RM19.82, while CIMB gained 13 sen to RM6.21 and RHB Bank rose 11 sen to RM5.61.

Phillip Capital Management Sdn Bhd CIO Ang Kok Heng said the support from the local funds is sufficient to offset the foreign selling.

“The retailers have also provided some support to the market, especially stocks that were beaten down recently,” Ang told The Malaysian Reserve (TMR) yesterday.

Ang believes a show of confidence by local institutions has kept the market in good stead. While he reckons foreign investor selling has eased, many are still on the sidelines on “wait and see” with minimal buying.

Based on preliminary data from Bursa Malaysia, excluding off market deals, the net amount sold by foreign investors on Tuesday was RM87.6 million, lower than the RM104.2 million on Monday.

In the same period last week, foreign funds pulled out RM609.2 million from Bursa Malaysia. Foreigners withdrew net RM5.6 billion, the highest monthly outflow in 2018 thus far.

Rakuten Trade Sdn Bhd VP of research Vincent Lau said the foreign selling pace has been tapering off, despite still appearing to be net sellers of Malaysian shares, as local buyers step up their exposure to the market.

“Institutional reforms are going good so far and I believe the retailers and local funds are supporting the local market,” Lau told TMR.

He noted expectations are high as the country’s economy is rejuvenating, and all eyes will be on who the new central bank governor will be and the monetary policy direction in the near term.