by BERNAMA/ TMR GRAPHIC
Local institutions emerged as net buyers of Malaysian equities post-Hari Raya celebrations, injecting RM139.2 million versus a net sell of RM306.72 million during last week’s holiday-shortened trading week.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said local institutions dominated, taking 45.69 per cent of the market this week, followed by foreign investors (32.07 per cent) and local retailers (22.25 per cent).
Foreign investors turned net sellers on Bursa Malaysia this week, with outflows amounting to RM209.1 million against inflows of RM328.26 million last week, while local retailers became net buyers, recording an inflow of RM69.9 million vis-à-vis an outflow of RM21.54 million.
“We have seen foreign investors record successive days of net sales between June 11 and 13. Therefore, the risk-off mode was very much prevalent as concerns over the ongoing trade war between the US and China continued to hog the limelight.
“This G20 Summit at the end of June will be closely watched as to whether US President Donald Trump and Chinese President Xi Jinping will meet up, and for what tangible progress that we can expect from the meeting,” he told Bernama.
Bursa Malaysia is expected to trade firmer with an upside bias next week, on the expected return of risk appetite backed by external and local factors.
Phillip Capital Management, Asia-Pacific senior vice president (investment) Datuk Dr Nazri Khan Adam Khan said the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to move between 1,640 to 1,650.
“The Malaysian equity market is expected to be steady next week, on expectations of a US Federal Reserve (Fed) interest rate cut in the near term, and as trade uncertainties take a back seat given a lack of concrete developments over the now stalling US-China trade negotiations.
“The Fed is meeting on June 18-19 and investors are keen to see its monetary policy stance with the focus shifted to the increasing likelihood for the central bank to cut the rate multiple times this year after last Friday’s US poor nonfarm payrolls,” he said.
This was in line with the projection made in a Bloomberg report released this week.
“The world’s worst major stock market earlier this year (Bursa Malaysia) is on the verge of recovery, having drawn some US$84 million from foreign investors last week, the most since late January,” according to Bloomberg.
Its compiled data also showed that foreign investors have been coming back, adding that the turnaround would be a boost to Prime Minister Tun Dr Mahathir Mohamad’s government, which has seen over US$3 billion (RM12.4 billion) of foreign funds flow out of the market since last year.
This is despite criticism from the opposition, including former prime minister Datuk Seri Najib Razak who was also the previous finance minister, that the new PH government’s policies and domestic politics have scared off foreign investors.
Meanwhile, FXTM market analyst Han Tan said the ringgit mostly traded within the 4.16-4.17 range this week, anchored by Malaysia’s better-than-expected April industrial production figures.
“The US dollar has been rather subdued with markets pricing in the US interest rate cut over the coming months, which has accorded some breathing space for Asian currencies.
“So far this month, regional assets have mostly benefited from the relative pause in the escalating tensions between the US and China, although market sentiment remains fragile and could quickly give way at further signs of heightened tensions between the world’s two largest economies,” he said in a statement.
Moving forward, Tan said the Fed’s upcoming policy decision is set to be a key driver of global markets, as markets expect at least one US interest rate cut to be a near-certainty this year.
Although the Fed isn’t expected to make any monetary policy moves this month, he said any hints of an eventual lowering of interest rates could see the US dollar weaken, while allowing Asian currencies to climb higher.
“The Fed’s US economic forecasts in the week ahead could also influence risk sentiment, whereby heightened downside risks for the world’s largest economy as highlighted by its central bank could fuel concerns over the broader global slowdown and prompt Asian assets to unwind recent gains.
“For the week ahead, should USD-MYR deviate from its current range, the 4.18 level is expected to serve as the near-term resistance level, with the immediate support line seen at the 4.15 mark,” he added.
Mohd Afzanizam said Bank Negara has the monetary policy space to prescribe an additional cut in the interest rates.
“This would be good for fixed income investors as interest rate and bond prices are moving in different directions. Therefore, with the ringgit deemed grossly undervalued, it could lure foreign investors to come in and support the ringgit along the way,” he said.
Meanwhile, Dr Mahathir recently said that the government will reduce the number of processes for investment applications in an effort to expedite approvals and boost the country’s economic growth.
Speaking to reporters after chairing the Economic Action Council meeting on Tuesday, he said traders and investors faced difficulties as they had to go through a long and tedious process before getting approval to invest.
The Prime Minister is scheduled to make a three-day working visit to the United Kingdom from June 15.
According to a Wisma Putra statement on Thursday, Dr Mahathir’s intinerary includes delivering a talk titled “Democracy in Malaysia and Southeast Asia” at the Cambridge Union on June 16, which is expected to attract well-known UK personalities and academics as well as students from higher learning institutions.
On another development, Media Prima Bhd has appointed Datuk Syed Hussian Syed Junid, 58, as its group chairman effective July 1, 2019, replacing Datuk Mohd Nasir Ahmad, whose tenure as group chairman ends on June 30.
Telekom Malaysia Bhd (TM) has also announced the appointment of Datuk Noor Kamarul Anuar Nuruddin as its new managing director/group chief executive officer/ executive director, effective June 13, 2019.