By Surin Murugiah / The Edge Financial Daily | May 24, 2016 : 8:51 AM MYTThis article first appeared in The Edge Financial Daily, on May 24, 2016.
KUALA LUMPUR: Foreign selling is soaring in Asia, no exception for Bursa Malaysia, sending equity prices on a downward trend regionally due to the reverse of the fund flow ahead of the US Federal Reserve’s decision on its interest rate in mid-June.
The continued foreign selling has weighed down the FBM KLCI, which has been on the decline since April 25.
Over the past month, the FBM KLCI had fallen as much as 93.3 points or 5.44% to a low of 1,621.21 points last Monday from 1,714.51 points on April 25. The benchmark index closed at 1,634.89 points yesterday, down 3.4% year to date (YTD).
The ringgit had depreciated 4.47% against the US dollar between April 25 and May 16 from 3.9075 to 4.0273. The ringgit closed at 4.0825 against the greenback yesterday.
Foreign selling continued for the fourth consecutive week and surpassed the prior week’s YTD high on Bursa, according to MIDF Research.
MIDF Research head Zulkifli Hamzah said regionally global liquidity continued to flow out of Asia last week; investors classified as “foreign” offloaded up to US$990 million equities as the intensifying debate of a US Fed June hike has been dampening global investors’ appetite for Asian stocks in general.
In the weekly fund flow report yesterday, Zulkifli said the net amount offloaded by foreign investors edged up to RM1.158 billion from RM1.004 billion the week before.
He said it was the first time foreigners sold more than RM1 billion for two consecutive weeks since August 2015, based on transactions in the open market which excluded off-market deals.
“Foreigners were net sellers every single day last week. As of [last] Friday, foreign investors had been selling in 17 out of 18 straight days.
“We note that daily selling has been consistently more than RM100 million. The prior week’s selling momentum was carried forward into last week,” he said.
He said last week’s foreign withdrawal further reduced the cumulative net foreign inflow into shares listed on Bursa to an estimated RM3.19 billion so far this year, down from the prior week’s RM4.35 billion.
weekly-flow-foreign_chart_fd240516_theedgemarkets
Nonetheless, he noted that the amount is still modest relative to the RM19.5 billion and RM6.9 billion net outflows in 2015 and 2014 respectively.
Zulkifli said the foreign participation rate edged down 6% compared with the prior week as it has narrowed by RM64.8 million to RM1 billion.
Nonetheless, he said that was its third consecutive week staying at over RM1 billion.
“Daily total foreign trade has been high on [last] Wednesday and [last] Thursday, which amounted to RM1.19 billion and RM1.16 billion respectively.
“Local institutions continued to support the market, mopping up RM1.179 billion. However, their participation rate declined to RM1.95 billion, the lowest since March this year,” he said.
He said retail buyers, for the first time in four weeks, turned net sellers by offloading RM21.2 million.
Foreign selling soars on Bursa Malaysia
http://www.theedgemarkets.com/my/article/foreign-selling-soars-bursa-malaysia
