KUALA LUMPUR: Foreign investors bought RM1 billion worth of Malaysian equities in January 2019 due to higher crude oil prices and a more “dovish” US Federal Reserve.
Maybank IB analyst Wong Chew Hann said foreign investors net sold only in 6 out of 21 trading days in Jan 2019.
“Foreigners were largely net buyers alongside Brent crude oil price which rose 15% from US$53 per barrel as at Dec 31, 2018, to US$61 per barrel as at Jan 31, 2019.
“The Federal Open Market Committee post meeting on Jan 29-30 indicated that the Fed is flexible on its interest rate and balance sheet policies to reflect economic and market situations,” he said in a research note. This also ended a three-month net sell.
Meanwhile, the cumulative foreign net buys (since early 2010) stood at a timid RM3.8 billion in Jan 2019, Wong said.
He said there could be a positive change if economic fundamentals improved and policy risks dissipate.
“We maintain our defensive core equity strategy. Key domestic lookouts are the fourth quarter of 2018 (4Q18) gross domestic product’s announcement (Feb 14, 2019) and 4Q18 corporate results season.
“While key external lookouts are the US-China trade talks (deadline early-March) and Brexit talks (deadline Mar 29),” he said.