Foreign funds dumped RM761m net of local equities last week

Foreign net outflow stood at RM1.5b in November, the 5th month of which selling levels exceeded RM1b


FOREIGN investors dumped RM761.2 million net of local equities last week, four times more than the preceding week amid geopolitical uncertainties.

Foreign funds were net sellers every day of the week, stretching the daily foreign selling spree to eight days, said MIDF Amanah Investment Bank Bhd (MIDF Research).

The local stock barometer saw RM64.8 million net of local equities disposed of on Nov 25 as investors assessed Hong Kong’s record election turnout and China’s pledge to step up protection of intellectual property rights.

“The level of foreign net outflow inched higher to RM76.1 million net on Nov 26 as foreign investors repositioned themselves in alignment with the MSCI rebalancing.

“As such the average daily traded value (ADTV) among foreign investors surged to RM2.5 billion, the highest since the last round of MSCI rebalancing in late May 2019,” MIDF Research said in its weekly fund flow report yesterday.

Foreign investors continued to reduce exposure at a tune of RM88.3 million, even as US President Donald Trump declared that the first phase of the trade deal was near completion.

“There was no reprieve in risk-off appetite as the foreign net selling later reached RM193 million on Nov 28 after Trump signed a bill supporting Hong Kong protesters.

“Foreign net selling then peaked on Nov 29 at RM339 million, as the possible retaliation from China towards the US’ support for Hong Kong protesters could put a strain on the current trade negotiations,” the research house said.

Foreign net outflow stood at RM1.5 billion in November, the fifth month of which selling levels exceeded RM1 billion.

Nevertheless, the outflow seen in Malaysia was not as high as Indonesia and South Korea.

On a year-to-date basis, foreign funds have taken out RM9.93 billion worth of local equities from Malaysia, making up 85% of last year’s total foreign outflow of RM11.69 billion.

“In terms of participation, foreign investors saw a spike in ADTV of 71% to hit RM1.7 billion, the largest in 10 weeks,” the research firm said.

The FTSE Bursa Malaysia KLCI (FBM KLCI) also ended the week in the red, dropping 2.2% — the biggest weekly decline since October 2018.

Likewise, the ringgit depreciated by 0.2% against the greenback to reach RM4.1778 against the US dollar during the week.

Meanwhile, Rakuten Trade Sdn Bhd said the FBM KLCI broke all immediate support levels last Friday, following what the research firm suspected was “rather drastic selling” from foreign funds.

The benchmark index fell by 22.03 points or 1.4% last Friday to close at 1,561.74, before recovering 0.6% or 8.81 points to close at 1,570.55 yesterday.

Last Friday’s slump was the biggest move recorded by the FBM KLCI in over a year, brought on by foreign funds repositioning themselves in alignment with the MSCI rebalancing.

“Amid prevailing uncertainties over US-China trade talks, regional weaknesses and fresh portfolio realignments among foreign funds, we reckon the local bourse may continue to experience volatility ahead.

“Nonetheless, we anticipate there will be some bargain hunting activities today, hence may see the FBM KLCI trending higher with immediate resistance at the 1,570 mark,” Rakuten Trade wrote in a note yesterday.