Equity outflow by foreign investors narrows to RM18.8 mil

The foreign equity outflow is continuing because of uncertainty over the US-China tariff talks, says an analyst.

KUALA LUMPUR: Foreign investors were net sellers in the Malaysian equity market, withdrawing RM18.8 million between Monday and Thursday, compared with RM263.5 million recorded during the previous week.

It was the second consecutive week that foreign investors had sold Malaysian equities, said Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid.

“Despite the outflow, the FBM KLCI surpassed its previous resistance level of 1,700 points and the next resistance level is at 1,746.15 points.

“Going forward, the key thing to watch for is corporate earnings,” he told Bernama.

Another analyst said the foreign outflow continued because investors were more cautious of the ongoing trade discussions between China and the United States.

“As the March 1 deadline is just around the corner, cautious sentiment clouded the market as worries heightened for a positive conclusion of trade talks,” he said.

Phillip Capital Management senior vice-president (investment) Nazri Khan Adam Khan said the cordial diplomatic ties between Malaysia and China should help reach a win-win solution for the East Coast Rail Link (ECRL) and cap any temporary weakness in the local equity market.

He said strong economic cooperation between Malaysia and China had resulted in both countries resuming talks to reach an amicable outcome on the project.

Any positive outcome would boost the infrastructure sector, he said.

Nazri also said the offer by a Chinese bank to issue panda bonds in China for Malaysia was a positive sign that foreign countries and foreign investors were confident with the new government.

On the ringgit’s outlook, he said it was expected to range from 4.05 to 4.00 against the US dollar next week, boosted by mild buying.

On Wednesday, the ringgit surged 140 basis points or 18% to 4.0640/0700 against the dollar from 4.0780/0830 on Tuesday, the highest level seen since Aug 1, 2018, when it touched 4.0640/0680.

“Steady crude oil prices, positive market sentiment in Malaysia and optimism over the US-China trade talks pushed the ringgit to finish at its highest level in more than six months,” he said.

For the week just ended, there were several major announcements, including the appointment of Jefferi M Hashim as CIMB Investment Bank Bhd CEO, effective March 1, and Muzmi Mohamed as the CEO of TH Plantations Bhd, effective Feb 11.

Meanwhile, Tenaga Nasional Bhd has extended the service of Leo Moggie as the non-independent non-executive chairman for another year, effective March 2.