Foreign investors turned net buyers on Bursa Malaysia last week (November 23-27) albeit marginally, riding on the positive sentiment towards the ringgit which was the best performing Asian and Emerging Market currency last week.
According to MIDF Research, foreign funds purchased RM96.3 million net of sales in the open market (i.e. excluding off-market deals) last week after offloading a total of RM1 billion in the preceding fortnight (November 16-20).
The research house observed that there was residual foreign selling on Monday, following the attrition in the week before.
“However, foreign investors bought back relatively strongly on Tuesday and the buying continued on Wednesday and Thursday,” MIDF Research pointed out in its weekly fund flow chart. “Unfortunately, concerns over Emerging Markets on Friday took its toll on the local bourse which succumbed to a RM60 million foreign attrition.”
For 2015, last week’s small surplus reduced the cumulative net foreign outflow to RM18.4 billion compared with the RM6.9 billion outflow for the entire 2014. “Foreign presence in the local equity market is currently very low,” projected the research note. “We estimate the overhang of foreign liquidity for money that came in since early 2010 to be less than RM10 billion, at only RM9.5 billion.”
Despite some optimism in the first and last week of November, MIDF Research expects the month to record a deficit in the flow of foreign liquidity. With one trading day left, the cumulative foreign fund outflow in November (until Friday) was RM843 million. This reversed the RM622 million inflow in October.
“Foreign participation rate (average daily gross trade) rose to RM933 million, the highest in five weeks,” noted the research house.
Elsewhere, MIDF Research observed that local institutions sold RM46.5 million net on RM2.33 billion participation rate while retailers offloaded RM50 million last week on heightened participation.
“(Their) participation spiked to RM980 million, the second highest in 2015,” revealed the research house. “Expect a roller coaster ride for small cap stocks this week!” The market for small cap stocks came under the weather last week with the FBM Smallcap Index falling -1.3% on Wednesday and -0.5% on Friday.
Moving forward, MIDF Research expects December to be a historically good month for the benchmark FBMKLCI index. “The FBMKLCI had recorded positive gains in 12 out of the last 14 last month of the year,” added the research house.