Foreign investors exited Malaysia equities for the 7th consecutive month in Mar 2023, at a sizable RM1.35 billion (net) (Feb: -RM0.17 billion), with almost all the selling occurring in the first 14 days. The last time that foreign selling was of this size was in Dec 2022, at RM1.36 billion.
“This brought their cumulative net sell for 2023 year to date to RM1.87 billion,” said Malaysia Investment Bank Bhd (MIBB) in a recent report.
Domestic institutions (plus nominees) bought RM1.28 billion in March (Feb: -RM0.26 billion), lifting their net buy for the year to date to RM1.77 billion. Retail investors also bought RM0.07 billion in March (Feb: +RM0.43 billion), bringing their net buy for the year to date to RM0.11 billion.
Trade participation (ex-direct business transactions) by foreign investors was higher month-on-month at 26.2% (Feb: 25.3%); domestic institutions was 46% (Feb: 47.3%) and retail was 27.8% (Feb: 27.4%).
Across ASEAN, foreign investors were also net sellers of Thailand (-USD0.92 billion) and Philippines (-USD0.5 billion) equities in Mar 2023; buyers of Indonesia (+USD0.27 billion) and Vietnam (+USD0.12 billion).
At USD0.3 billion, foreign net sell of MY equities in Mar 2023 was the 3rd largest. Year to date, foreign investors withdrew USD1.65 billion from Thailand, USD0.52 billion from Philippines and USD0.42 billion from Malaysia; added USD0.45 billion in Indonesia and USD0.25 billion in Vietnam. For Malaysia, the total foreign net buy/(sell) value for 12 months to Mar 2023, as % of market value, was -0.3% (Feb 2023: +0.0%).
Foreign holding of MY equities was 20.2% end-Mar 2023 (end-Feb: 20.4%). The Securities Commission’s Capital Market Stability Review 2022 report breaks down the composition of foreign investors based on market foreign holding of 20.58% at end-Sep 2022: (i) strategic investors – 14.13%, (ii) non-strategic, active investors – 3.83%, (iii) non-strategic, passive – 2.62%.
By geography, 43.99% of the non-strategic investors were from the US (their top 3 holdings were in the banks), 14.8% from the UK, 13.12% from Singapore, 7.46% from Norway, and 3.34% from Hong Kong.
Despite global bond selloffs, RM bonds buck the trend with a surprisingly large RM4.3 billion inflow in Feb 2023 (Jan: +RM0.5 billion), the largest monthly inflow since Aug 2022. This raised the total foreign holdings to RM251.5 billion (Jan: RM247.3 billion), which was the highest since Sep 2022.
By debt instrument, inflows were driven by Malaysian government securities (+RM4 billion) and government investment issues (+RM1 billion) while discount instruments (-RM0.3 billion) and private debt securities (-RM0.4 billion) posted continued outflows. The foreign share of Malaysian government securities was unchanged at 34.5% (Jan: 34.5%) while that of Malaysian government securities+government investment issues increased slightly to 22.4% (Jan: 22.3%).
Offsetting the RM0.2 billion outflow from Malaysia equities in Feb 2023, the total portfolio flow was +RM4.1 billion. This brought cumulative portfolio flow for Jan-Feb 2023 to +RM4.2 billion (2022: -RM5.4 billion).
