KUALA LUMPUR, Aug 4 — International funds have sold RM293.5 million net in the holiday-shortened week of July 29 to August 1, about six times more than the RM53.4 million disposed of during the whole of last week.

MIDF Amanah Investment Bank Bhd Research (MIDF Research) analyst Adam Mohamed Rahim said the bulk of the foreign net outflow was attributed to July’s last trading day on Wednesday, which saw a sell-off worth RM334.3 million net ahead of the Federal Reserve’s policy meeting amid the stalemate in US-China trade talks.

"Nevertheless, August started on a positive note as foreign investors mopped up RM40.6 million on Thursday, driven mainly by Press Metal Aluminium Holdings Bhd as it signed a power purchase agreement with Syarikat SESCO Bhd, a unit of Sarawak Energy Bhd,” he told Bernama.

Press Metal secured up to 500 megawatts (MW) of electricity for its proposed third aluminium smelter plant at Samalaju Industrial Park, Sarawak.

"On a year-to-date basis, the foreign net outflow from Malaysia remains above RM4 billion in contrast with other regional peers that are experiencing foreign net inflows,” Adam added.

Meanwhile, Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said foreign selling to continue on next week, following the losses recorded on Bursa Malaysia on Friday, which saw the FBM KLCI shed 12.31 points to end at 1,626.76.

"Looking at the size of the drop on Friday, most likely the selling will continue for couple more days next week, one or two more days at least and then it would take a breather,” Pong added.

On Wednesday, the US Federal Reserve reduced its key benchmark interest rate by 0.25 per cent to a range of two per cent and 2.25 per cent in the first reduction in borrowing costs since the financial crisis a decade ago.

However, investors were disappointed at the vague direction of the US interest rate cuts after the Federal Reserve signalled that there would not be an extended series of rate cuts.

"They made a point that it is not going to be a long series of rate cuts. Probably they just (cuts) either one, two or three the most,” he added.

He said the equities markets also reacted negatively to President Donald Trump’s threat to impose an additional 10 per cent duties on about US$300 billion (RM1.2 trillion) worth of Chinese imports beginning from next month.

On Friday, China warns of retaliatory measures in response to Trump’s announcement that could plunge the two countries in a deeper trade war, magnifying the potential damage to both economies.

Meanwhile, OCBC Treasury Research has maintained its call for another 25 basis points cut in US interest rate cut in September and possibly another 25 basis points interest rate cut in December.

This is amid the inconclusive end to the most recent US-China trade talks in Shanghai and Donald Trump’s sustained pressure on US Federal Reserve chairman Jerome Powell to keep up with monetary policy easing ahead of the 2020 presidential election as well as continued signs of deceleration in the global economic momentum.

Meanwhile, Malacca Securities Sdn Bhd saw prospects for further recovery from an oversold position earlier this week, but the continuing weaknesses on Wall Street may keep the recovery in check over the near term.

It added that the global markets are rocked again by the US’ move to impose new tariffs on China goods that are unlikely to leave the local market unscathed.

"This is set to dampen sentiments again at the end of the week, albeit we think that the downside bias could be limited as the FBM KLCI is already oversold and may provide some cushion to the potential downside, in our view,” it added.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the Federal Open Market Committee recently suggested that the US Federal Reserve was still sanguine about the economy, citing the still strong labour market and household spending.

"Therefore, the 25 basis points cut is seen as buying an insurance policy to protect the downside risk. This may have upset the market, which led to the strong US dollar and weaker equity indices,” he told Bernama.

Mohd Afzanizam said the non-farm payroll data releases on Friday would be closely watched to gauge the strength of the US labour market and how it would translate into monetary policy action going forward.

"However, the recent tweet from President Trump on the 10 per cent tariff against USD300 billion import from China has resulted in the risk-off to become prevalent. Again, demand for the safe-haven currencies and flight to quality to fixed income market would mean downside risk for equities remain visible next week.

"Apart from that, second-quarter earnings season for listed companies in Malaysia has begun and the tell-tale sign was not really forthcoming,” he added. — Bernama