Foreigners short RM631m worth of local equities on lira fears

The year-to-date outflow from Malaysia stood at RM8.6b as of last Friday


Foreign investors sold RM631.4 million net worth of stocks on Bursa Malaysia last week after two weeks of buying.

MIDF Amanah Investment Bank Bhd’s fund flow report yesterday noted foreign funds started selling early in the week as the Turkish lira fell in value and left its impact across emerging markets (EMs).

“The offshore investors were already selling a lot last Monday to a tune of RM142.3 million net as the crisis in Turkey rippled across the EMs including Malaysia.

“It came as no surprise that local stocks with exposure to Turkey such as Malaysia Airports Holdings Bhd (MAHB) and IHH Healthcare Bhd were major decliners that day,” the investment bank’s report noted.

The level of foreign net attrition, however, tapered last Tuesday and Wednesday to RM127.1 million and RM85.4 million respectively as the Turkish lira rebounded from its massive drop last Monday.

“The FTSE Bursa Malaysia KLCI followed suit to advance on those two days while other regional markets, such as in Thailand and Hong Kong, were in the red during the same period,” it said.

Foreign selling gradually accelerated for the remaining of last week following news that the US and China will resume trade talks in late August, coupled with Malaysia’s weaker gross domestic product (GDP) growth of 4.5% for the second quarter of 2018 (2Q18).

“The selling was contributed by the announcement of Malaysia’s lower than expected 2Q18’s GDP growth of 4.5% against the market expectations of 5.2%,” MIDF said.

As of last week, MIDF noted the month of August recorded a foreign net outflow worth RM128.6 million.

The year-to-date outflow from Malaysia stood at RM8.6 billion as of last Friday, it said.

The participation of foreign investors has been encouraging with weekly average daily traded value (ADTV) reaching above RM1 billion for 31 out of 33 weeks.

“The weekly ADTV of the retail market and local institutional funds also remained healthy above RM800 million and RM2 billion respectively, despite the drop last week,” it said.

United Plantations Bhd was the greatest beneficiary of net money inflow, raking in RM10.9 million, while CIMB Group Holdings Bhd saw RM9.64 million of net inflow and Top Glove Corp Bhd with RM7.99 million.

Malayan Banking Bhd saw the largest net money outflow with RM22.09 million last week, followed by MAHB and Genting Bhd with outflows of RM21.88 million and RM15.18 million respectively during the week, the report stated.