KUALA LUMPUR, Jan 20 — Foreign investors were generally net buyers in the Malaysian equity market, pumping in RM231.21 million between Monday and Thursday compared with only RM25.5 million during last week’s holiday-shortened trading days.

Foreign fund outflow of RM12.33 million was only registered on Monday while the remaining days saw net inflow of foreign funds.

M&A Securities Sdn Bhd chief dealing officer R. Sundararajah said the benchmark FBM KLCI gained 9.51 points until Thursday and generally, it was smooth sailing with the equity market seeing regained interest among foreign buyers.

"There was buy call for equities in this region by some foreign houses, amid low stock valuation and this too had a positive effect on the FBM KLCI.

"In addition, the easing of the tariff dispute between the United States nd China was welcomed by equity markets in the region,” he told Bernama.

Sundararajah, however, said the latest uncertainty over United Kingdom’s Brexit saga on Tuesday which turned out to be an anti-climax, somewhat adversely affected the local market.

The decision by China Central Bank to inject US$83 billion to maintain liquidity in the banking system was another major news in the market this week.

"Moving forward, we expect the stock market, next week, to hover around current levels and test the 1,690 points level, barring unforseen circumstances both at home and abroad,” said Sundararajah.

Meanwhile, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said from Monday until Thursday, the participation of local institutions in the equity market was at its peak, with an average rate of 49.2 per cent, followed by foreign institutions at 25.6 per cent and local retail at 25.2 per cent.

"However, local institutions were net sellers between Monday and Thursday, offloading RM278.6 million in stocks while local retail were net purchases, accounting for RM47.4 million,” he said.

Mohd Afzanizam said this was driven by developments in the global economy which continued to grapple with heightened uncertainties.

The Brexit issue and China’s stimulus plan of cutting its value-added tax rate on selected industries to avert slowdown coupled with the US government shutdown, the longest in history, weighed heavily on investor sentiment.

"Going forward, ongoing trade discussions between the United States and China will be closely scrutinised.

"Similarly, any progress on Brexit will be a major breakthrough especially when Prime Minister Teresa May survived a vote of no-confidence on Wednesday,” said Mohd Afzanizam.

Echoing Sundararajah’s views, he also expected the FBM KLCI to be confined within a tight range as market sentiment would continue to remain cautious.

Meanwhile on the home front, Finance Minister Lim Guan Eng said Goldman Sachs’ apology in regards to the involvement of its former employee, Tim Leissner, in the 1Malaysia Development Board (1MDB) scandal was not sufficient and that the investment bank should make reparation and pay Malaysia a compensation of US$7.5 billion.

He pointed out that the apology was necessary for Malaysia and the investment bank must be accountable as the issue also involved a breach of financial duty where the banking industry had the obligation to make good the losses that the country had suffered. 

Leissner has been criminally charged by US and Malaysian prosecutors with bribery and money laundering in connection with 1MDB and is scheduled to be sentenced in June.

In a separate development, the government has appointed Mizuho Bank (Malaysia) Bhd, HSBC Bank Malaysia Bhd and Daiwa Capital Markets Ltd as joint lead arrangers for the 10-year 200 billion yen (RM7.6 billion) samurai bond.

Lim said the appointments were made after six proposals were shortlisted from the 27 proposals received by the Finance Ministry.

During the tabling of 2019 budget in the Dewan Rakyat last year, the Finance Minister said that the Japanese government has offered to guarantee the 200 billion yen bonds, which is expected to be issued before March this year.

Commenting on the matter, Inter-Pacific Research Sdn Bhd head of research Pong Teng Siew said the news sparks the possibility that the government was ready to spend again through the awarding of new contracts in the future.

"The government was very cautious and preoccupied on trimming its spending, lowering the national debt and getting a better value for its spending.

"But  this news is likely to instill confidence and positvity among investors as this would mean more liquidity returning back into the equity market and more work in building government infrastructure,”  said Pong.

Meanwhile, the crash in crude oil prices in 2014 looks set to claim its first publicly listed victim, with Perisai Petroleum Teknologi Bhd headed for removal from Bursa Malaysia on Feb 13.

The former market darling last Friday failed to secure Bursa Securities’ approval for its regularisation plan and has received a notice from the regulator of its trading suspension starting Jan 22.

On Friday, shares of DRB-HICOM Bhd was affected after its indirect subsidiary, Proton Automobiles (China) Ltd, was slapped with a RM523 million civil suit by a former Chinese partner, Goldstar Heavy Industrial Co Ltd.

The claim is in relation to a contract entered into between DRB-HICOM’s 50.1 per cent-owned Proton, Lotus Group International Ltd and Goldstar in April 2015 to form a joint venture called Goldstar Lotus Automobile Co Ltd.

DRB-HICOM ended the week declining 12 sen to RM1.67 with 10.25 million shares traded while Perisai Petroleum was flat at half-a-sen.

As for the ringgit, FXTM research analyst Lukman Otunuga said the local note was expected to trade higher next week backed by strong domestic fundamentals and higher oil prices.

However, he said it would still be exposed to external uncertainties including the Brexit, US monetary policy and US-China trade tension.

On Friday, the ringgit was quoted at 4.1100/1150 compared with 4.1120/1150 against the greenback on Thursday. — Bernama