Foreign investors dump huge sum of Malaysian equity after election

BY  | FROM  | 2018-05-21 14:31

Global funds reacted to the unprecedented outcome of Malaysia's 14th General Election (GE14) by dumping about 2.48 billion ringgit (624 million U.S. dollars) of Malaysian equities in the open market last week, the heaviest weekly foreign selldown in the country since some five years ago.

MIDF Research said in a report Monday, foreign investors have been net sellers of Malaysian market for 10-straight trading days as of last Friday.

In the week ended Aug. 23, 2013, Malaysia's stock market saw a net outflow of 2.9 billion ringgit.

According to the report, Malaysia saw a net outflow of 682.6 million ringgit on the first trading day after GE14, and the net foreign selling swelled to 837.3 million ringgit in the following day, the largest in a day since early February 2018.

The foreign outflows tapered to 320.7 million ringgit on last Wednesday as investors cheered the post-GE14 reforms which included the reduction of goods and services tax (GST) to 0 percent effective from June 1, in addition to the pardon granted to jailed former Deputy Prime Minister Anwar Ibrahim.

Foreign investors continued selling on last Thursday and Friday to a tune of 384.4 million ringgit and 251.2 million ringgit net respectively as the surge in U.S treasury yields during the week crept into minds of investors.

Due to the intense selling pressure, the cumulative net inflow into Malaysia so far this year has been substantially reduced to 40.2 million ringgit from 2.52 billion ringgit before GE14, said the report.

"We are cautiously optimistic that this cumulative figure may gradually pick up as more political clarity comes into picture," said MIDF.

Despite recording the largest weekly outflow among the four ASEAN markets that it monitored last week, it said, Malaysia is still the major beneficiary of foreign inflows.

Thailand's weekly net outflow last week increased to 203.2 million U.S. dollars, while Philippines bourse's net outflow remained contained at 42.6 million U.S. dollars. Indonesian bourse has also seen 16 straight weeks of outflows after foreign investors pulled out 242.4 million U.S. dollars net of local equities last week.

MIDF noted, foreign participation in Malaysia remains strong as the foreign average daily trade value soared by almost 100 percent to 2.39 billion ringgit last week, the highest in 24 weeks.

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