Foreign investors’ funds exited the Malaysian capital market continuously for the last 10 weeks amid brewing political uncertainties, as the 13 state elections looms within the next two months.
“This is the longest streak of net selling by foreigners this year,” said MIDF Research said in a note on Monday (June 26), adding that the cumulative outflows from the local stock exchange over the past 10 weeks amounted to RM2.06 billion.
The research house said that foreign investors recorded daily outflows last week peaking on Friday at RM96.2 million in parallel to weak sentiments on Wall Street.
The exodus was mainly cushioned by local institutional investors, who continued to record net buy of RM250.3 million, their fourth straight week of buying.
Year-to-date, MIDF said foreign investors have net sold Malaysian equities for 19 out of 25 weeks, totalling RM3.83 billion.
“This makes Malaysia the second worst performing market in terms of foreign fund flows, in comparison to the eight exchanges that we track,” it said.
In contrast, local institutional investors have been net buyers for 19 out of 25 weeks, with a total amount of RM3.45 billion.
In terms of participation, there was a decline in average daily trading volume (ADTV) across the board among retail investors (-10.3%), local institutions (-19.6%) and foreign investors (-31.0%), MIDF added.
Last week, local retail investors recorded a net selling of RM10.3 million, but they have been net buyers for 13 out of 25 weeks since the beginning of the year, bringing their total net buy to RM381.6 million.
Malaysia’s net foreign fund outflows last week were also in line with regional sentiment — of the eight markets that MIDF monitored, most of them saw a pullback of foreign investor funds as further rate hikes and slowing economy stoked fears.
