THE intensity of foreign net selling activity on Bursa softened during the holiday-shortened week with international investors sold RM663.8 mil net of local equities last week compared to RM714.7 mil in the preceding week, said MIDF Amanah Investment Bank Bhd.
Its analyst, Adam Mohamed Rahim in a research note today said this was in line with other Asian markets which saw foreign net selling activity dwindled to a level not seen in more than two years while in emerging South-East Asian markets, majority of markets continue to experience foreign net attrition.
The same trend was also seen on major equity markets worldwide, which ended fairly well last week amidst optimism over the reopening of the economy which overshadowed the renewal of trade tension.
“Locally, for the month of May 2020, Adam said foreign investors disposed of RM3.0 bil net, the second-highest monthly foreign net outflow so far this year after March bringing the year-to-date foreign net outflow from Malaysia to RM13.3 bil.
“This is still the third smallest foreign net outflow among the seven Asian markets we monitor,” he noted.
He said, as Bursa reopened from a long weekend last week, international investors dumped RM362.5 mil net of local equities on Wednesday, the highest foreign net outflow in a day since the middle of March 2020.
Nevertheless, retail and local institutional investors mopped up local equities at a tune of more than RM100 mil net with a strong interest in rubber glove counters, pushing the local bourse one per cent higher on the same day, he said.
Offshore investors he said, continued their selling activities Thursday but at a slower pace of RM227.1 mil net.
“Risk-on sentiment on that day was boosted by Wall Street’s overnight rally which saw the Dow Jones soar 553 points on mounting optimism that global authorities were taking measures to enhance economies,” he said.
For instance, Adam cited the European Commission proposed stimulus package of US$826 bil to aid recovery from the economic slowdown induced by the Covid-19 pandemic.
On Friday, foreign net selling was reduced to a level below RM100 mil at RM74.2 mil, lifted by growing optimism that Asian economies will gradually reopen from pandemic lockdowns.
The local stock barometer followed suit to settle one per cent higher at 1,473.3 points, the highest close in more than a month, he said.
In terms of participation, only foreign investors saw a substantial weekly increase in their average daily traded value (ADTV) to reach RM3.5 billion, the largest weekly since the week ended June 1, 2018, he added. – June 1, 2020, Bernama
