KUALA LUMPUR, Jan 18 — Foreign investors acquired RM326.0 million net of local equities in the second week of 2021 compared to the RM336.9 million withdrawn in the preceding week, marking the biggest weekly foreign net inflow recorded on Bursa Malaysia in 84 weeks.
The local bourse started the week on the right foot as international investors snapped up RM87.9 million net of local equities on Monday despite speculations of another round of tighter movement restrictions imposed by the government to curb the spread of the Covid-19 pandemic.
“The local bourse declined by 1 per cent on Monday ahead of the government's announcement at 6pm of the movement control order (MCO) re-imposition in certain states and federal territories from January 13 to 26, 2021,” Bank Islam Malaysia Bhd economist Adam Mohamed Rahim told Bernama.
He said offshore funds then bought RM101.9 million net of local equities on Tuesday even after the announcement of the state of emergency on the same day and an initial knee-jerk reaction in the stock market which saw panic selling among investors was somehow inevitable.
For instance, he said the FBM KLCI dropped by 11.78 points during the first session of the day as the market closed midday but at Tuesday’s close, the FBM KLCI only saw a fall of 5.2 points or 0.3 per cent to 1,612.0 points.
However, Adam said the situation was not as bad compared to the first MCO in March 2020, which saw the FBM KLCI close at 1,280.6 points on March 16, 2020 prior to the announcement made on the same day before declining more to reach as low as 1,219.7 points three days later, translating into a 4.8 per cent drop during that interval.
The reason being that businesses and consumers have experienced the MCO before, making them more prepared to face the crunch, he said.
Beginning Wednesday, investors started to gain market confidence and as a result, the exchange saw foreign net buying gaining pace, reaching RM127.2 million net, pushing the local bourse to settle 1.5 per cent higher at 1,636.7 points on the first day of the MCO.
Buying interest mostly revolved around banking stocks as Maybank, CIMB Group, Public Bank and Hong Leong Bank, all gaining by at least one per cent on that day.
“Perhaps investors shrugged off concerns over the state of emergency and MCO as restrictions were not as harsh as before, while a suspended Parliament could mean that policy makers would be more focused on improving the economy rather than dealing with political differences. The rally in banking stocks pushed the Bursa Malaysia financial services index by 3.4 per cent,” he said.
However, the momentum of foreign net inflow slowed down to reach RM5.3 million net on Thursday while the FBM KLCI only declined by 0.1 per cent.
Sentiment was rather upbeat coming from the external front following the mostly positive cues overnight from Wall Street amid expectations of additional US stimulus from the incoming US President-elect Joe Biden administration.
Investors shrugged off news that the US House has impeached President Donald Trump for a second time.
However, the risk-on mood was perhaps tempered by local sentiment whereby the three rubber glove makers on the FBM KLCI index, namely Top Glove, Hartalega and Supemax, all declined by at least 3.0 per cent on Thursday amid concerns of easing demands for rubber gloves as the vaccine roll-out begins.
Offshore investors remained as net buyers on Friday to the tune of RM3.7 million net, marking the seventh consecutive day of foreign net inflows on Bursa Malaysia despite the trend in Covid-19 infections showing no signs of slowing down.
“This is the longest foreign net buying streak seen on Bursa Malaysia since January 2019 which witnessed foreign funds acquiring local equities for nine uninterrupted days.
“The foreign net buying activity on Friday was contained as investors began to scrutinise Biden’s anticipated US$1.9 trillion Covid-19 relief plan,” he said.
In terms of participation levels, foreign investors remained active on Bursa Malaysia as seen in the average daily traded value (ADTV) of RM1.6 billion last week which is considered a healthy level. — Bernama
