KUALA LUMPUR: Foreign funds were net buyers with the local bourse recording a total net inflow of RM90.2 million between March 18 and March 21 versus total net outflow of RM472.2 million recorded in the same period in the previous week.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said average foreign fund participation ratio between March 18 and March 24 stood at 26.8 per cent versus 24.7 per cent between March 11 and March 14.
“It is somewhat unclear why foreign institutional funds have been gradually accumulating Malaysian equities as the decline in the FBM KLCI was pretty much the outlier as opposed to regional indices,” he told Bernama.
Mohd Afzanizam added that emerging markets fared quite well this week as the statement issued by US Federal Open Market Committee on Wednesday suggested that the US Federal Reserve might pause its interest rate hike and perhaps would be inclined to reduce the Fed Fund Rate at some point in the horizon.
“This is in light of the downward revision of its 2019 and 2020 Gross Domestic Product from 2.3 per cent and 2.0 per cent made in December 2018 to 2.1 per cent and 1.9 per cent, respectively.
“Perhaps, values have emerged which would entice foreign institutional investors to buy Malaysian shares,” he said.
Meanwhile, Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew expected foreign funds to maintain their net buyer position at least for another month, albeit, not aggressively.
Agreeing with Mohd Afzanizam, Pong said US Federal Reserve’s stance to keep interest rates unchanged could likely be one of the reasons why foreign funds have decided to reverse their positions this week, after being net sellers previously.
“When they stop increasing rates, this will strengthen the currencies of emerging markets. We are already seeing the ringgit appreciating.
“We expect some funds to take advantage of the emerging market currencies (to accumulate),” he added.
On Friday, the ringgit ended at 4.0600/0650 against the US dollar compared with 4.0890/0940 recorded last Friday while the benchmark FTSE Bursa Malaysia KLCI closed at 1,666.66 compared with 1,680.54 last week.
Moving on, Mohd Afzanizam said the market can expect high degree of uncertainties on the back of the tricky Brexit deal.
British Members of Parliament are expected to vote on the Brexit on March 29.
“This is very important for British Prime Minister Theresa May who hopes to get an extension to the Brexit dateline. The UK MPs need to show their resolve in order to allow smooth transition after exiting the European Union,” said Mohd Afzanizam.
Domestically, Bank Negara Malaysia is expected to unveil its 2018 annual report on March 27 while investors would scrutinise the economic growth forecast and monetary policy stance during the analyst briefing scheduled on the same day.
Among major developments hogging the highlights during the week was the 15th edition of Invest Malaysia, a capital market forum co-organised by Bursa Malaysia Bhd and Malayan Banking Bhd
During the event, Prime Minister Tun Dr Mahathir Mohamad said the Pakatan Harapan-led government spent a good part of its first year plugging the “almost bottomless pit” created by 1Malaysia Development Bhd.
Dr Mahathir, who is also PH chairman, said that in the 10 months of its administration, the government was fully aware of the peoples feeling.
On the corporate front, Finance Minister Lim Guan Eng urged banks to be more flexible in lending, amid complaints about stringent access to lending to local investors. – Bernama
