KUALA LUMPUR: Foreign investors continued to exit Bursa Malaysia in the first four days of the week, recording a total net outflow of RM304.65 mil from Feb 17-20 against a net inflow of RM80.77 mil from Feb 10-13.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said this was due to concerns over the rise in new cases of Covid-19 outside China which appeared to have taken centre stage and continued to influence sentiment on Bursa Malaysia this week.
“This is especially true in the case of South Korea where the number of new cases has shot up to 52 as of Feb 20, bringing the cumulative cases to 156.
“As such, investors were anxious about the potential impact on global growth given that trade and investment are very intertwined following the prevalence of global supply chains,” he told Bernama.
Against such a backdrop, he said major banks in Asia have been cutting the benchmark rate in order to support economic growth.
“The average participation rates for foreign and local institutions stood at 21.96% and 49.35% respectively, compared with 24.81%(foreign institutions) and 48.06% (local institutions) in the same period the previous week.
“Local institutions recorded RM124.23 mil worth of net buying during the Feb 17-20 period, compared with a net selling of RM170.74 mil during the Feb 10-13 period,” he added.
Meanwhile, net fund flows for the local retail sector recorded a net buying of RM180.42 mil with an average participation of 28.70% during the Feb 10-13 period, compared with a net buying of RM89.97 mil with an average participation of 27.14% during the previous period.
Afzanizam said he foresees foreign investors to remain guarded in view of the economic uncertainties.
“Next week, the focus would be on the unveiling of the fiscal stimulus package by the government (to be announced by Prime Minister Tun Dr Mahathir Mohamad) on Feb 27, and as such we expect the FBM KLCI to remain in a tight range (next week),” he said.
Asked whether Bank Negara Malaysia would make another overnight policy rate cut in the upcoming monetary policy committee, he said he expects the central bank to be inclined to cut the rates between March and May.
“All eyes will be on the fiscal stimulus package especially on the size and the focus sectors,” he said.
On Monday (Feb 17), Finance Minister Lim Guan Eng said the upcoming stimulus package would serve to mitigate the economic impact of Covid-19 and help industries rebound when the outbreak is contained.
As Malaysia is among the earliest to launch the package even though the impact of the outbreak has yet to be ascertained, Lim said this showed that the government places emphasis and priorities on the challenges posed by the outbreak.
Deputy Finance Minister Datuk Wira Amiruddin Hamzah has also advised employers to retain and retrain workers amid Covid-19 to prepare for a rebound, saying the government has already engaged with the affected industry players and is now looking into the stimulus package to be offered in order to help them.
Meanwhile, the 10-year National Automotive Policy (NAP) 2020 launched by the prime minister on Friday (Feb 21) incorporates three new advanced technology elements namely Next Generation Vehicle, Mobility as a Service and Industrial Revolution 4.0.
Dr Mahathir said the revised policy will also encourage research & development and engineering activities, build capabilities and capacity of the local workforce, support national car projects as well as enhance exports, investments and local production volume. - Feb 23, 2020, Bernama