Equity market continues to be well supported by local institutions

by BERNAMA/ pic by TMR FILE

FOREIGN investors remained net sellers in the local equity market, recording a lower total net outflow of RM879.57 million from the Monday to Thursday period last week against RM930.62 million in the corresponding period from Feb 24-27.

Bank Islam Malaysia Bhd said Malaysian equity markets remained well supported by local institution funds with total net purchases amounting to RM650.67 million.

“Similarly, local retail was the net buyer of RM228.9 million during the same period.

“Going forward, we foresee investors would remain guarded in view of Covid-19 spread outside China,” its chief economist Dr Mohd Afzanizam Abdul Rashid (picture) told Bernama yesterday.

He said central banks across the globe seem to take a concerted effort to resuscitate economic growth by aggressively cutting policy rates.

This, he said, will increase the appeal of fixed income securities such as government bonds due to the inverse relationship between bond prices and interest rate.

“We also foresee portfolio managers will tend to place their interest in bonds or sukuk in anticipation that yields could go lower, in tandem with the expected decline in the interest rate set by the local central bank,” he said.

He said with interest in bonds and sukuk heightened, it would mean bond prices could go higher and therefore, investors could lock some gains, as a result.

“We have seen the 10-year US Treasury yields fell to below 1%. Currently, the 10-year yield for the Treasury bonds stood at 0.9%, lower by 25 basis points from end-February,” Mohd Afzanizam said.

Similarly, he said, the 10-year Malaysian Government Securities yield touched an all-time low of 2.78% on March 2, before rebounding to 2.86% on March 5.

“The shifting in asset class could limit the upside potential in the equities market,” he noted.