Local equity market records first monthly foreign net inflow in over two years

KUALA LUMPUR, Sept 6 — Total monthly foreign net inflow reached RM1.1 billion in August this year, the first monthly foreign net inflow after 25 consecutive months of foreign net outflow, said Bank Islam Malaysia Bhd economist Adam Mohamed Rahim.

He said the foreign investors ended the month of August with a bang as they acquired RM513.6 million net of local equities.

“In fact, this was the largest daily foreign net inflow recorded so far in 2021,” he told Bernama, adding that for last week, foreign investors acquired RM786.4 million net of local equities compared to the RM964.2 million net bought in the previous week.

Adam said as markets reopened on Wednesday after the National Day celebration (Tuesday), the month of September began on a positive note with international investors buying RM116.7 million net of local equities.

This was despite China’s factory activity growing at a slower pace in August compared to the previous month.

The weakness in China’s factory activity somewhat raised hopes of an easing in policy, pushing the CSI 300 index higher by 1.3 per cent on Wednesday.

Perhaps the gains seen in China’s equity market spilled over to other parts of Asia including Malaysia, he reasoned.

The momentum of foreign net buying slowed down on Thursday to reach only RM6.8 million net as some investors began to take profit following the 7.1 per cent monthly gain in the FTSE Bursa Malaysia (FBM KLCI) during August.

“Nevertheless, the pace of foreign net buying spiked to RM149.3 million net on Friday as some of the positive vibes were sparked by the government’s decision on the activation of the Langkawi travel bubble from September 16, 2021, pushing the Bursa Malaysia Transportation and Logistics Index higher by 1.5 per cent, the largest gainer among sectoral indices during that day,” he said.

On a year-to-date basis, foreign net selling on Bursa stands at RM4.2 billion net.

Separately, MIDF Research in its note said the FBM KLCI decreased by -0.06 per cent last week to settle at 1,589.19 points while the ringgit saw a weekly appreciation by about 1.07 per cent against the greenback to close at RM4.1460 to the US dollar last Friday. — Bernama