Foreign investors remained net sellers on Bursa Malaysia last week, although selling pressure eased significantly, signalling improving market sentiment amid continued rotation into defensive large-cap stocks, according to CIMB Securities.
In its latest fund flow report, the research house said foreign investors recorded net outflows of just RM0.7 million during the week of July 27 to 31, a sharp improvement from RM131.1 million in the previous comparable period. Year-to-date foreign net outflows now stand at RM2.86 billion.
CIMB Securities said the moderation in foreign selling contributed to stronger market performance during the week, while relatively light foreign positioning leaves room for overseas inflows to return should global risk appetite improve.
Domestic institutional investors also remained net sellers for a fourth consecutive week, although their net outflows slowed markedly to RM1.6 million from RM31.6 million previously. Despite the recent profit-taking, local institutions remain net buyers of RM2.5 billion on a year-to-date basis.
Retail investors, however, turned into the biggest net sellers after previously being the largest buyers. They recorded net outflows of RM46.3 million, reversing from net inflows of RM223.3 million two weeks earlier and bringing cumulative year-to-date retail net outflows to RM380.9 million. The research house attributed the selling to investors locking in gains following the recent market rally.
Proprietary traders emerged as the week’s largest buyers, recording net inflows of RM48.5 million, compared with net outflows of RM60.6 million previously. Their cumulative net purchases for the year now total RM753.1 million.
CIMB Securities said the combination of modest foreign and institutional selling alongside retail profit-taking points to cautious near-term sentiment following recent market gains. However, the sharp slowdown in net outflows suggests the broader market remains fundamentally resilient.
On a sectoral basis, foreign investors continued rotating into defensive sectors, with the healthcare sector attracting RM129 million in net inflows, followed by transportation at RM121 million and financial services at RM80 million.
The purchases were led by IHH Healthcare Bhd, Westports Holdings Bhd and Public Bank Bhd, reflecting investor preference for companies offering earnings resilience and attractive dividend yields.
Conversely, foreign investors reduced exposure to industrials, which saw net outflows of RM244.4 million, followed by technology (RM204.3 million) and plantation (RM31.2 million). Major stocks affected included Press Metal Aluminium Holdings Bhd, ViTrox Corp Bhd and Malayan Banking Bhd.
Domestic institutional investors largely took the opposite side of these trades, trimming holdings in financial services, healthcare and transportation while selectively accumulating industrial, technology and plantation stocks.
Their top purchases included Press Metal, Petronas Chemicals Group Bhd and SD Guthrie Bhd, while their largest disposals were Public Bank, IHH Healthcare and Westports.
Meanwhile, retail investors were net buyers of technology and financial services counters but took profits in plantation and transportation stocks.
Looking ahead, CIMB Securities said investors will monitor several key domestic and global developments.
Among the major events is the OPEC+ ministerial meeting, where members are expected to determine September oil production levels.
Domestically, attention will turn to the special parliamentary sitting on Aug 11, where lawmakers are scheduled to debate the findings of the Royal Commission of Inquiry into Lembaga Tabung Haji.
The market is also expected to watch the appointment of the Negeri Sembilan state executive council, which Menteri Besar Datuk Ismail Lasim has indicated could be finalised by Aug 7 following consultations with Barisan Nasional leaders and the consent of the Yang di-Pertuan Besar.
Geopolitical developments in the Middle East and the Red Sea remain another key risk, given their potential impact on global energy prices, inflation and financial markets.
CIMB Securities noted that Brent crude prices may face downward pressure after US President Donald Trump said he had agreed to cancel a planned large-scale attack on Iran following requests from Middle Eastern allies to pursue diplomatic efforts.
Investors will also continue monitoring the ongoing second-quarter corporate earnings season for signs that resilient domestic demand and exports are translating into stronger corporate profitability, with Hartalega Holdings Bhd and Sentral REIT among companies scheduled to report results during the week.
