Foreign funds snap 4-week buying streak

PETALING JAYA: Foreign funds sold RM6.9 million net of local equities last week, snapping the four-week foreign net buying streak on Bursa with the smallest weekly foreign net outflow thus far this year.

According to MIDF Research, a bout of foreign funds entered Bursa at a tune of RM17.8 million on Monday as the 1.3% year-on-year drop in China’s exports for June 2019 was lesser than market expectations.

“The local bourse took cue as it advanced marginally by 0.2% to settle at 1,672 points on the same day,” it said in its fund flow report today.

On Tuesday, foreign investors sold RM42.6 million net of equities ahead of the release of US retail sales data and on Wednesday, foreign net selling remained albeit at a slightly slower pace of RM39.8 million.

“Sentiment was dampened mainly by the possibility of President Trump imposing additional tariffs on China despite promising to hold off more duties in a trade-war truce reached with China’s President Xi Jinping last month,” it said.

On Thursday, positive vibes returned to the market, with international funds accumulating RM40.2 million net of local equities. The risk-on mood was reignited by the rally in Taiwanese chip makers, following better forward guidance by Taiwan Semiconductor Manufacturing Company Ltd underpinned by stronger chip demand.

On Friday, there was foreign net inflow of RM17.5 million, which coincided with the FBM KLCI’s first advance in four days to close 0.6% higher at 1,658 points.

MIDF Research said the mood on Friday was supported by the latest phone talks between senior US and China officials regarding trade.

“The month of July has so far seen a foreign net inflow of RM308.2 million. Meanwhile, the year-to-date foreign net outflow from Malaysia stands at RM4.36 billion. In contrast, the other six Asian markets we monitor (Korea, Thailand, Indonesia, India, Taiwan and the Philippines) have seen a foreign net inflow so far for the year with India having the largest,” it added.

Overall investor participation weakened last week as the average daily traded values (ADTV) fell. The biggest weekly decline in ADTV was observed for local institutional funds at 12.4%.

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