Are political uncertainties pushing foreign funds to shy away from Bursa?

FOREIGN investors continued to dump Malaysian equities for the fourth consecutive week during the shortened trading week on Bursa Malaysia last week due to the Federal Territory Day celebration.

Net selling escalated to -RM380.8 mil or 89.6% higher than the week prior. They net bought RM35.6 mil on Thursday (Feb 2) but net sold -RM48.6 mil on Monday (Jan 30), -RM98.9 mil on Tuesday (Jan 31) and -RM68.1 mil on Friday (Feb 3).

“There may be renewed signs of political uncertainties that have emerged following the sacking and suspension of senior and influential UMNO members as the party is part of the unity government,” opined MIDF Research in its weekly fund flow report.

“The appointment of the Prime Minister’s daughter as his economic and senior adviser also sparked debates from various parties who have alleged nepotism and cronyism and that it would affect the country’s corruption perception index ranking.”

The top three sectors which saw net inflows by foreign investors last week were consumer products & services at RM58.7 mil, technology (RM23.7 mil) and telecommunications & media (RM15.7 mil).

The bottom three sectors with net outflows were financial services at -RM174.0 mil, healthcare (-RM43.3 mil) and plantation (-RM35.9 mil). Year-to-date (YTD), foreign investors have net sold -RM89.1 mil.

However, local institutions maintained their shopping spree on Bursa Malaysia for the fourth consecutive week with net buying of RM130.6 mil last week. They net bought RM9.6 mil on Monday (Jan 30), RM59.3 mil on Tuesday (Jan 31), RM500,000 on Thursday (Feb 2) and RM61.2 mil on Friday (Feb 3). YTD, local institutions have net bought RM816.0 mil.

Meanwhile, local retailers turned net buyers with RM49.4 mil last week, reversing their net selling trend of three consecutive weeks. They only net sold -RM36.0 mil on Thursday (Feb 2) but were net buyers with RM38.9 mil on Monday (Jan 30), RM39.6m on Tuesday (Jan 31) and RM6.9 mil on Friday (Feb 3).

In terms of participation, there was an increase in average daily trading volume (ADTV) across the board by 64.7%, 19.6% and 7.8% from foreign investors, local institutions and local retailers respectively.

In comparison with another four Southeast Asian markets tracked by MIDF Research last week, Thailand recorded the biggest foreign fund outflow with US$272.4 mil followed by Malaysia with US$42.2 mil while Vietnam saw the biggest inflow with US$71.6 mil followed by Indonesia (US$52.6 mil) and the Philippines (US$9.9 mil).

The top three stocks with the highest net money inflow from foreign investors last week were Nestle (M) Bhd (RM26.4 mil), Velesto Energy Bhd (RM24.9 mil) and Heineken Malaysia Bhd (RM19.5 mil). – Feb 7, 2023

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