KUALA LUMPUR, May 17 — The continuous net foreign outflows in the equity market reflect that offshore investors are taking a defensive strategy and shifting into risk-free assets such as government securities.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said foreign funds outflows slightly eased to RM734.18 million between Monday and Thursday this week from RM736.28 million in the same period last week.
This week’s average participation for foreign funds stood at 15.86 per cent during the first four days of the week compared to 45.47 per cent in the corresponding period last week.
Meanwhile, local institutions recorded a higher net buy of RM611.27 million between May 12 and 14 compared to RM397.46 million previously from RM397.46 million week-on-week, while local retail investors’ net buy this week eased to RM122.91 million from RM266.82 million.
He noted that weak economic data continued to dominate the market this week, as well as talks of a possible resurgence of Covid-19 cases in certain countries such as China and South Korea.
“(Local) health-related companies saw a big jump in their share prices during the week, lifting the FBM KLCI above the psychological level of 1,400 points. It seems the market is struggling to surpass the 1,400 points, reflecting higher risk premium which has been prevalent,” he told Bernama.
On May 13, the FBM KLCI ended 17.2 points or 1.25 per cent higher at 1,397.13, while share trade volume across Bursa Malaysia closed higher at an all-time high of 9.59 billion shares, as the spectre of a resurgence of Covid-19 cases dictated world stock market sentiment.
The spectre of resurgence in the pandemic led to buying of shares in healthcare-related companies like rubber gloves manufacturers and hospital operators.
Top Glove Corp Bhd rallied this week, putting the world’s biggest glove maker in the pole position among the top five stocks in the FBM KLCI by weighting. The current top ranked stock is Public Bank Bhd, followed by Tenaga Nasional Bhd, Malayan Banking Bhd and CIMB Group Holdings Bhd.
According to Bloomberg-complied data, Top Glove rallied a record 49 per cent in four consecutive days this week, after brokers boosted their share estimates to as high as RM13.30.
Mohd Afzanizam said constant criticisms towards China by US President Donald Trump in respect to Covid-19 spread was very unhealthy for the global economy.
“This could reignite the trade dispute, which has been plaguing the economy since last year,” he added.
Moving forward, OANDA senior market analyst Jeffrey Halley said a major event facing Malaysia is Monday’s sitting of Parliament.
He noted that the political outlook being the elephant in the room and if recovery trade runs out of steam in the US market in particular, that will have a knock-on effect across the world, with developing economies likely to suffer an outsized reaction.
“Elsewhere, if markets continue to price in a global economic recovery at the pace we have seen over the past few weeks, foreign investor outflows may reduce and indeed, reverse,” he told Bernama. — Bernama