KUALA LUMPUR, March 3 — Foreign investors have been net sellers for a third week in a row, with net sales of RM290.6 million between Monday and Thursday this week compared with the previous week’s RM319 million.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said external headwinds appeared to have made a strong come back, affecting market sentiment negatively.
He said this was in the wake of weak China factory data and the sudden end of the US-North Korea Summit in Vietnam, where US President Donald Trump abruptly walked out from the meeting with North Korean leader Kim Jung Un.
“Uncertainties over the US-China trade deal, the US Federal Reserve monetary policy and India-Pakistan geopolitical tensions also weighed on market sentiment,” he told Bernama.
On the local front, Mohd Afzanizam said the market saw mixed corporate results throughout last week.
He said while the banking sector announced decent results, other sectors such as properties and plantation reported some degree of weakness.
This, coupled with weak business sentiment, as reflected by the Manufacturing Purchasing Manager’s Index (PMI) indices, and amid external uncertainties, especially on geopolitical developments which took centre stage again, resulted in risk aversion seeping in.
February’s business sentiment, as indicated by the latest PMI Index, for the US, Eurozone, Germany and Japan fell to 53.7 (Jan: 54.9), 49.2 (Jan: 50.5), 47.6 (Jan: 49.7) and 50.3 (Jan: 48.5), respectively.
“We could expect trading to be choppy next week. From a technical standpoint, certain indicators have pointed an overbought position and therefore, the technical correction is likely to happen,” he added.
“As for the ringgit, the currency seems to be well supported, perhaps following the inflows of fixed income portfolio which might have been the main factor, judging from the decline in bond yields during the month,” he said.
External economic factors have influenced the local currency movement this week, including the ongoing US-China trade negotiations, the Brexit progress, news on possible US interest rate hike, as well as the movement of the crude oil price.
US Federal Reserve chairman Jerome Powell, on Tuesday, reiterated that the central bank would stay patient on the monetary policy, bringing the greenback under pressure, while on Thursday, European leaders indicated that they would consider delaying the UK’s departure if a trade deal is not agreed upon by March 29.
On the local front, the January consumer price index (CPI) data released by the Statistics Department recorded the first decline in nearly a decade with the overall index decreased 0.7 per cent to 120.5 compared with 121.3 in the corresponding month of the preceding year.
FXTM research analyst Lukman Otunuga said in the past week, the ringgit mostly traded within the 4.065-4.075 range against the US dollar, as most Asian currencies gained against the greenback.
“Despite Malaysia dipping into deflation for the first time since 2009, the headline CPI may better reflect the domestic inflation story, once the base is rebalanced in the fourth quarter of this year, noting that the sales and services tax was reintroduced last September.
“Given that domestic inflation is likely to remain manageable in 2019, along with the resilience of economic growth and domestic consumption, Malaysia’s central bank is expected to stand pat on the overnight policy rate this year,” he said in a statement.
On a Friday-to-Friday basis, the local note ended higher at 4.0720/0770 against the US dollar from 4.0760/0810 last week.
For the week just ended, there were several major announcements, including the appointment of Tetsuya Kainaka as SMBC Malaysia president/chief executive officer (CEO), effective Jan 23, and Mukesh Dhawan as Zurich Takaful Malaysia Bhd CEO, effective March 1. — Bernama
