Foreign selling in Bursa Malaysia expands to RM268.9m last week

by BERNAMA / pic by ARIF KARTONO

FOREIGN investors remained as net sellers on Bursa Malaysia last week, selling RM268.9 million net of local equities for the week ended Nov 20, compared to RM246.3 million sold in the whole of the preceding week.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said Bursa Malaysia started the week on the wrong foot as offshore investors offloaded RM126.4 million net of local equities on Monday.

“The positive vibes which came from the signing of the Regional Comprehensive Economic Partnership (RCEP) by Malaysia and 14 other countries were somewhat outweighed by the sell-off in rubber glove counters, amidst the thematic play focusing on the expected economic recovery,” he told Bernama.

On Tuesday, he said the level of foreign net selling rose to RM143.7 million as investors continued to reduce exposure in rubber glove counters.

The sell-off in rubber glove counters was exacerbated by the news that Moderna Inc’s experimental COVID-19 vaccine was 94.5 per cent effective in a preliminary analysis of a late-stage clinical trial, he said.

“The euphoria which had spread across other sectors lifted the FBM KLCI 0.7 per cent higher on Tuesday to close above 1,600 points for the first time since the end of July this year.

“Offshore funds later snapped up RM169.6 million net of local equities as the majority of investors chose to focus more on positive vaccine news versus rising virus infections,” Adam noted.

He said the local bourse remained above 1,600 on Wednesday after Pfizer Inc issued a statement that a key safety milestone had been reached in the study of its COVID-19 vaccine, and the drugmaker is now preparing to seek for an emergency-use authorisation from the United States regulators.

“But the foreign net inflow was short-lived, as international investors sold RM170.5 million net of local equities on Thursday,” he said.

As the number of new infections surged worldwide, he said, the authorities have taken steps to address the pandemic’s effects on market sentiments.

He cited Indonesia’s central bank’s move to cut its policy rate for the first time in four months, while the Philippines’ central bank reduced its key interest rate after the nation’s economy contracted more than it had expected in the third quarter of the year.

On Friday, international funds acquired RM2.1 million net of local equities, which pushed the local bourse higher by 0.6 per cent to close at 1,593.8 points.

“Buying interest for rubber glove counters re-emerged after the sell-off during the week amidst the COVID-19 vaccine optimism.

“Among the 30 FBM KLCI index constituents, Top Glove dominated gainers with a five per cent advance, which boosted the Bursa Healthcare Index by more than one per cent,” Adam noted.

Meanwhile, he said on a year-to-date basis, foreign investors have disposed of RM23.37 billion net of local equities in 2020.

He added that in terms of participation by foreign investors, the average daily traded value from Monday to Friday remained robust at RM1.62 billion, with Malaysia recording the second largest year-to-date foreign outflow after Thailand among ASEAN peers.