FOREIGN investors remained net sellers in the local equity market last week, recording a lower total net outflow of RM879.57 mil from Monday-Thursday against RM930.62 mil in the corresponding period from February 24-27.
Bank Islam Malaysia Bhd said Malaysian equities market continued to be well supported by local institution funds with total net purchases amounting to RM650.67 mil.
“Similarly, local retail was net buyer of RM228.9 mil 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 said today.
He said central banks across the globe seems to take a concerted effort to resuscitate economic growth by aggressively cutting down on policy rates.
This he said, would increase the appeal of fixed income securities such as government bonds due to the inverse relationship between bond prices and the interest rate.
“We foresee portfolio managers would 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 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 1.0%. Currently, the 10-year yield for the US Treasury bonds stood at 0.90%, lower by 25 basis points from end February,” Mohd Afzanizam said.
Similarly, he said, the 10-year Malaysian Government Securities yield has touched an all-time low of 2.78% on March 2, before rebounded to 2.86% on March 5.
“The shifting in asset class could limit the upside potential in the equities market,” he noted. – March 8, 2020, Bernama
