Foreign investors move cautiously back as dust settles

According to an expert, the benchmark FTSE Bursa Malaysia KLCI ended the week at 1,805.75, 141.89 points higher compared with 1,663.86 on July 6 ― a strong indicator of subsiding uncertainty among investors. — Picture by Azneal Ishak
According to an expert, the benchmark FTSE Bursa Malaysia KLCI ended the week at 1,805.75, 141.89 points higher compared with 1,663.86 on July 6 ― a strong indicator of subsiding uncertainty among investors. — Picture by Azneal Ishak

KUALA LUMPUR, Aug 12 ― Foreign investors are slowly gaining confidence in the local equity market as Pakatan Harapan government’s policies and direction become clearer as its 100 days milestone approaches, Rakuten Trade Sdn Bhd Head of Research Kenny Yee said.

He said the benchmark FTSE Bursa Malaysia KLCI ended the week at 1,805.75, 141.89 points higher compared with 1,663.86 on July 6 ― a strong indicator of subsiding uncertainty among investors.

As at Thursday, foreign funds were net buyers, bringing in RM485 million, an increase of 46 per cent compared with a net inflow of RM331.9 million last week.

Even though initially the shake-ups in government-linked companies (GLCs) has caused some anxiety among investors, that has now changed as the government showed a clearer direction, he added.

“The institutional reform agenda has been on the right track and foreign investors who have been on the sidelines may have started to come back, albeit at a measured pace,” he told Bernama.

Among the GLCs that had gone through major changes were Khazanah Nasional Bhd, Permodalan Nasional Bhd, the Employees Provident Fund and Petroliam Nasional Bhd (Petronas). 

Inter-Pacific Securities Sdn Bhd Head of Research Pong Teng Siew believes that the local stock market would continue to be on the uptrend as foreign companies have started to buy back stocks that were oversold.

“They have to meet the targeted portfolio that they like to keep in the country, which in their views have a positive prospect,” he said.

However, the equities market is far-fetched from recouping the outflow thus far, he said.

“Even though the inflow has increased, it has yet to offset the net outflow of RM11.678 billion by foreign buyers since May 2,” Pong said.

Hence, the new government still has room to prove its mettle, he said, adding that, it must look beyond just the fiscal position.

Although cleaning the book is important, the government should also look into public expenditure.

“As its (government’s) spending would affect the earnings of companies, and without the cash flow companies cannot attract inflows and attain the expectations of their investors in the long run,” he said.

As for the ringgit, it was under pressure for the most part of this week.

It ended the week lower following the strengthening of the US dollar due to heightening trade tensions.

Malaysian Industrial Development Finance Bhd Chief Economist Dr Kamaruddin Mohd Nor said the US dollar has hit a 10-year high, which would cause other currencies to depreciate further against the greenback.

“The strengthening of the US dollar has weighed down on merging market currencies, including the ringgit. The ringgit was mainly affected by external factors, coupled with moderating oil prices,” he said.

As of the new appointments that took place within this week, the Malaysian Palm Oil Board has appointed Tan Sri Mohd Bakke Salleh as its new chairman for a two-year term, replacing Datuk Seri Ahmad Hamzah. 

However, his appointment has received criticism as he was the former chairman of the troubled strategic investment company 1Malaysia Development Bhd.

Despite the backlash, the appointment was supported by Primary Industries Minister Teresa Kok who contended that Bakke is a man of integrity who could take the palm oil industry to greater heights. ― Bernama

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