KUALA LUMPUR, March 10 — Heightened risk aversion saw foreign investors reducing their exposure on Bursa Malaysia with selling accelerating to RM709.9 million between March 4 and 7 compared with RM447.7 million worth of equities offloaded between Feb 25 and Feb 28.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said foreign institutional funds remained net sellers for the fourth consecutive week on wobbly developments on the external front mainly due to unfavourable economic data released by major economies.
He said the Purchasing Managers' Index in Germany, Japan and China were below the 50 points demarcation mark, a signal that manufacturers’ sentiment had weakened.
Additionally, China also projected a Gross Domestic Product (GDP) growth of between 6.0 and 6.5 per cent for 2019.
“This suggests that the Chinese economy will continue to grow moderately this year. Similarly, the European Central Bank also revised downwards their GDP growth target to 1.1 per cent for 2019 versus 1.7 per cent predicted earlier.
“This really explains why equities were underperforming, Investors were risk averse throughout the week,’’ Mohd Afzanizam told Bernama.
In addition, he said the lacklustre performance on the local bourse was attributable to the slew of poor corporate earnings reported by bluechip companies in telecommunications, utilities, oil and gas, plantation and construction.
“Their earnings suffered from high impairment, leading to lower profitability and some even recorded significant losses,” he explained.
Going forward, he said the outlook for company earnings remain challenging in view of the slower economic growth this year.
“Key events to watch out for next week include Britain’s exit from the European Union (Brexit) as British Members of Parliament will vote on the latest deal. As such, expect equities to remain tepid in the near-term,” he added.
For the week just-ended, several major financial results were announced including that of Khazanah Nasional Bhd, which recorded a whopping pre-tax loss of RM6.27 billion in 2018 against a pre-tax profit of RM2.89 billion chalked up in 2017.
The fund’s profitability was affected by fewer divestments, reduced dividend income and higher impairments during Khazanah’s transition.
Meanwhile, FGV Holdings Bhd, reported a net loss of RM1.08 billion in 2018 compared with a net profit of RM130.92 million in 2017 on the back of a lower revenue of RM13.46 billion in 2018 from RM16.92 billion recorded in the preceding year.
In contrast, Petronas’ net profit rose to RM55.3 billion in 2018 from RM45.5 billion in 2017 with revenue better at RM251 billion versus 2017’s revenue of RM223.6 billion, driven by higher average realised prices for all key products.
On a Friday-to-Friday basis, the FBM KLCI settled 20.86 points lower at 1,679.90 with the market mostly lower on lack of positive direction. — Bernama