KUALA LUMPUR, May 21 — Foreign funds reacted negatively to the unprecedented outcome of the 14th general election (GE14) by offloading RM2.48 billion of local equities last week.
“This is the heaviest weekly selldown in Malaysia since the week ended August 23, 2013 with a net outflow of RM2.90bil. Year-to-date net inflow now stands at RM40.2mil,” MIDF said in its weekly fund flow report.
MIDF noted that the first trading day after GE14 saw a net outflow of RM682.6 million.
However, the trading value on Bursa Malaysia was the highest ever recorded on the same day at RM7.3 billion.
On Wednesday, foreign outflows tapered to RM320.7 million as investors lauded the post-GE14 reforms that included the reduction of GST to 0 per cent effective from June 1 in addition to the full pardon granted to jailed former deputy prime minister Datuk Seri Anwar Ibrahim.
The FBM KLCI followed suit to settle 0.54 per cent higher at an eight-day trading high of 1,858 points as buying activity by retailers and local funds continued amid renewed optimism.
MIDF said foreign investors continued selling on Thursday and Friday at RM384.4 million net and RM251.2 million net, respectively, in line with the the surge in US treasury yields during the week influence their decision to withdraw funds regionally..
“Due to the intense selling pressure, the cumulative net inflow into Malaysia so far this year has been substantially reduced to RM40.2 million from RM2.52 billion before GE14.
“We are cautiously optimistic that this cumulative figure may gradually pick up as more political clarity comes into picture,” MIDF said.
“Despite recording the largest weekly outflow among the four Asean markets we monitor last week, Malaysia is still the major beneficiary of foreign inflows,” the research house added.
Foreign participation remains strong as the foreign average daily trade value(ADTV) soared by almost 100 per cent to RM2.39 billion, the highest in 24 weeks.
