Foreign buyers ease up on Malaysian stocks
BURSA MALAYSIA is seeing signs of a softening momentum after weeks of outperformance that saw it reaching its highest level in almost two years, largely due to foreign buyers.
Foreign purchases on the country’s stock exchange halved last week, as investors turned cautious on the overall sentiment in the global market, partly affected by the US air strikes in Syria and the meeting between US President Donald Trump and Chinese President Xi Jinping.
According to MIDF Research, foreign buying dipped below the 1 billion ringgit mark (Bt7.7 billion) – at 645 million ringgit - for the first time last week, after three weeks of an average of 1.33 billion ringgit in net purchases.
The exchange’s leading indicator, the FBM KLCI, has been trading sideways since last week.
Analysts said that the FBM KLCI is “taking a break” after having been on the uptrend since the end of February.
Corporate earning growth
Since the beginning of the year, the index has increased by as much as 6.8 per cent after three years of negative growth. The rise in the FBM KLCI also reflected corporate earnings growth in 2016, which registered about an 8 per cent increase.
“The FBM KLCI is having a hard time remaining above the 1,750-point level and will likely soften this week. We are looking at it hitting the 1,720-point before signs of a rebound in a few weeks,” a chartist said.
The softer local equity market is also in line with key Asian markets.
“Albeit with slower inflows, foreign investors have continued to purchase local equities, while local institutions have been taking profits,” said a fund manager.
MIDF said that it has been nine straight weeks of foreign buying on Bursa, during which 6.1 billion ringgit made its way to Malaysian shores, although the last week came in below 1 billion ringgit mark.
“Year-to-date, the cumulative amount is slightly higher at 6.39 billion. The inflow this year has already offset the estimated |net outflow of 3.01 billion ringgit in 2016,” it said in a report yesterday.
MIDF said Sime Darby saw the highest net money inflow of 25.37 million last week. Its share price advanced by 0.43 per cent, outperforming the FBM KLCI which increased by 0.09 per cent during the week under review.
CIMB Group Holdings recorded the second-highest net money inflow of 23.78 million.
Meanwhile, Kenanga Investment Bank Research said the primary trend of the KLCI was still upwards.The research house said in the absence of key catalysts, all eyes would be on the upcoming corporate earnings season for more clues on market direction, as big US banks would be reporting results this week.
