KLCI records net inflow after 25 weeks

by BERNAMA/ pic by BLOOMBERG

DESPITE cautious sentiment on the global economic outlook, the local equity market has rebounded to record a net foreign buying this week, after the 25th consecutive week of net foreign selling.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said from Monday to Thursday last week, international investors acquired RM76.8 million net of local equities compared to the RM937.5 million net disposed from Monday-Friday period in the preceding week.

“Bursa Malaysia started the week on a positive note as international investors snapped up RM54.6 million net of local equities on Monday, snapping the eight-day selling spree on the local bourse.

“Bargain hunting occurred at the start of the week following the announcement of July’s US non-farm payrolls on the previous Friday which rose by 1.8 million in July,” he told Bernama.

However, he said the tables were turned last Tuesday as foreign investors dumped RM103.3 million net of local equities, dragging the FTSE Bursa Malaysia KLCI (FBM KLCI) -0.4% lower to 1,564 points.

“Trading volume reached another record high of 27.8 billion shares last Tuesday with a total value of only RM7.6 billion, indicating that penny stocks were still in focus,” he said.

He added that another bout of foreign net inflow worth RM19.8 million was observed last Wednesday amid hope of that a vaccine against the Covid-19 pandemic has been approved by Russia.

Notwithstanding, he said the FBM KLCI index settled -0.5% lower at 1,556.6 points last Wednesday as rubber glove counters took a hit, pushing the Bursa Healthcare Index -6.3% lower to be the biggest laggard among other sectors.

Moreover, Adam said the sentiment was mixed due to concerns over whether the US lawmakers would strike an agreement on an additional round of big fiscal stimulus to support the nation’s economy that is struggling with the Covid-19 pandemic.

“The momentum of foreign net buying accelerated to RM105.7 million last Thursday, the highest in more than a month, coinciding with the FBM KLCI index’s 1.3% jump to close at 1,576.4 points.

“The positive vibes were sparked by the overnight gains in US stocks, extending a steady August rally that has pushed the S&P 500 Index to the cusp of its first record close since the coronavirus pandemic which brought the economy to a halt,” he said.

In comparison to Asean peers, namely Thailand, Indonesia and the Philippines, he said Malaysia has the second-highest foreign net outflow of RM19.7 billion after Thailand on a year-to-date basis.

On a weekly basis, the FBM KLCI declined 13.55 points to end at 1,564.59.