Foreign fund outflow slowed to RM212m this week

KUALA LUMPUR, July 12 — International investors disposed of RM212.1 million net of local equities in the period of July 6 to July 9 (Monday-Thursday), down from the net outflow of RM339.4 million in the whole of last week.

 Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said Bursa Malaysia started the week on a positive note as foreign funds made a modest return, acquiring RM79.9 million net of local equities on Monday and effectively snapping the 13-day selling spree.

The FTSE Bursa Malaysia KLCI (FBM KLCI) settled 1.6 per cent higher at 1,576.90 points on the same day, the biggest one-day gain in more than a month.

"The rally in the FBM KLCI on Monday was in line with other regional bourses, which picked up steam as investors were anticipating a revival in global economic growth supported by the rebound in Chinese economic activity," Adam told Bernama.

He said the tide reversed on Tuesday as foreign investors dumped RM289.7 million net of local stocks, the largest foreign net outflow on a single day since early June this year.

The heavy foreign net selling on Tuesday coincided with FBM KLCI’s 0.7 per cent drop after Bank Negara Malaysia’s decision to cut the Overnight Policy Rate by 25 basis points to 1.75 per cent, a record low since the floor was set in 2004, amid Covid-19.

On Tuesday as well, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said international agencies had forecast that Malaysia's gross domestic product (GDP) growth in 2021 would be in the range of 6.3 per cent to 7.5 per cent.

He said the projections were subject to Malaysia’s continued success in managing COVID-19, as well as in steering and nurturing the economy towards recovery and growth.

As for 2020, the GDP growth has been estimated at between -3.8 per cent and 0.5 per cent by various agencies.

Tengku Zafrul also announced that Budget 2021, to be unveiled on Nov 6, would be framed across four broad themes -- caring for the people, steering the economy, sustainable living and enhancing public service delivery.

Meanwhile, Adam said positivity made its way back to the local market as foreign investors mopped up RM229.1 million net of local equities on Wednesday, lifting the FBM KLCI to its highest close since late January of 1,583.50 points.

"Although there was fear of a second wave of the Covid-19 pandemic, the market was supported by interest in glove makers, which would benefit more from their capacity expansion plans," Adam explained.

Having said that, he said the mood turned sombre on Thursday as international investors sold RM231.5 million net of local equities with the absence of new catalysts.

"Despite the sell-off by foreign investors, the local bourse declined by less than 0.1 per cent to settle at 1,583.25 points on the same day, partly buoyed by the nation’s Industrial Production Index rising 18.2 per cent month-on-month in May 2020 amidst the resumption of business activities," he said.

Malaysia has the second highest foreign net outflow of RM16.74 billion year-to-date among ASEAN countries after Thailand.

Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift said the local stock market saw a stronger participation from retail investors recently compared to a year ago, particularly in cash investment.

"They've not been borrowing to invest, which showed reallocation from lower-yielding investments back to the stock market," he said.

On Friday, the Securities Commission and Bursa Malaysia announced the temporary revisions of the existing market management and control mechanisms such as circuit breakers to provide added stability and confidence in the marketplace. The revised mechanisms will apply from July 20, 2020 to Jan 18, 2021.

 Among others, trading will be halted for the rest of day as soon as the index falls by an aggregate of or more than 15 per cent of the previous market day’s closing index. At present, the trigger point for stopping for the rest of the day is when the FBM KLCI drops by an aggregate of 20 per cent.

Among other corporate developments during the week was AirAsia Group Bhd’s disclosure of a net loss of RM803.85 million for the first quarter ended March 31, 2020, compared with a net profit of RM96.09 million a year earlier.

While the company triggered the prescribed criteria pursuant to Paragraph 8.04 and Paragraph 2.1(e) of Practice Note 17 (PN17) of the Main Market Listing Requirements, AirAsia said on Wednesday it would not be classified as a PN17 listed issuer and would not be required to comply with the obligations of the requirements for a period of 12 months.

The following day, the airline, which plans to shore up liquidity to ensure sufficient cash flow, said it had received indications of support from certain financial institutions in its request for funding, amounting to more than RM1 billion.

Meanwhile, Sime Darby Plantation Bhd (SDP) gave its initial statement of response regarding the serious allegations in a petition submitted by non-governmental organisation Liberty Shared (LS) to the US Customs and Border Protection on April 20.

It was reported that LS wanted the United States to block imports of SDP’s palm oil and palm oil products based on allegations of forced and child labour by SDP-owned and affiliated companies.

Describing the allegations as serious, SDP said these were against the commitments that the palm oil producer had publicly made, as articulated in their Responsible Agriculture Charter and Human Rights Charter.

Meanwhile, Proton Holdings Bhd announced it had sold 1.8 million units of Proton Saga in the last 35 years in the country, making it the most popular model of the Malaysian automotive brand.

Malaysia Airlines Bhd (MAB) said it would launch a joint business partnership with Japan Airlines (JAL) on July 25, 2020, whereby the two carriers would cooperate commercially on flights between the two countries.

With MAB resuming flights to Japan starting July, the two airlines combined will offer four weekly services between Kuala Lumpur-Tokyo Narita in July and August.

KPJ Healthcare Bhd said it expected to see a gradual recovery in terms of the number of patients seeking its healthcare services towards year-end, and remained optimistic on its long-term outlook, barring any second wave of the Covid-19 pandemic.

The healthcare provider’s occupancy rate improved to 40 per cent in June this year from 31 per cent in May and about 20 per cent in April, following the government’s move to ease the Movement Control Order to revive the economy. — Bernama