[EXCLUSIVE] Foreign funds selling enters 2nd week on Bursa

KUALA LUMPUR, The Malaysian equities market was sluggish last week amidst uncertainty in the external sector and volatility surrounding the eligibility of Malaysian government bonds in the World Government Bond Index (WGBI).

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said from Sept 23-26, foreigners remained as net sellers, taking out RM13.6 million from Bursa Malaysia.

However, the pace has been gradually declining and when compared to last week’s shorter trading days of Sept 17-20 where foreign funds sold RM249.3 million. The market was closed on Sept 16 for Malaysia Day.

“Concerns over slower global growth will continue to affect sentiment. The recent move to convene an impeachment inquiry of President Donald Trump suggests that political instability in the US may also dampen market sentiment next week,” he told Bernama.

The US House Intelligence Committee has released an unclassified version of a complaint filed by a whistleblower that alleged President Trump used the power of his office to solicit interference from a foreign country for the 2020 US Presidential election.

The complaint alleges the president pressured Ukrainian President Volodymyr Zelensky to investigate former Vice President Joe Biden, one of the frontrunners of the 2020 presidential election, and his son, Hunter Biden.

Locally, analysts have also mixed views on the eligibility of Malaysia bonds to stay on FTSE Russell’s watchlist until next review in March 2020.

While MIDF Research said the news provided positive sentiment for the ringgit, local equities seem to react negatively, with an analyst citing possible challenges to contain foreign selling.

FTSE Russel said it is maintaining Malaysian bonds on its fixed-income watchlist until the next review in March.

Meanwhile, on the local front, Phillip Capital Management senior vice-president (Investment) Datuk Dr Nazri Khan Adam Khan said the trend in foreign fund outflow had increased the past few weeks on slower global economic growth.

He said year-to-date, the net fund outflow has registered RM7.8 billion.

“I believe Prime Minister Tun Dr Mahathir Mohamad’s proposal to get one of Petronas’ subsidiaries to be a listed company on Bursa Malaysia will attract more investors to the institution.

“The idea should at least reduce the fund outflow, if not increase the fund inflow, thus stabilising the fund outflow that we see today,” he said.

On Friday, Tun Dr Mahathir named Petronas Carigali as one of the candidates, adding, there are also a few other possibilities.

At present, Petronas Chemicals, Petronas Dagangan and Petronas Gas are among the 30 index-linked companies on Bursa Malaysia.

Moving forward, Nazri Khan said investors are awaiting the tabling of Budget 2020, scheduled for Oct 11.

“We hope positive announcements from the budget will help attract more fund inflow to the country,” he added.

Bursa Malaysia’s FBM KLCI stood at 1,592.93 at last Monday’s close (Sept 23) and ended the week (Sept 27) at 1,584.14.

On a weekly basis, the index dropped 13.27 points from the previous Friday’s 1,597.41 (Sept 20).

Meanwhile, the ringgit, which settled at 4.1770 on Monday, stood at 4.1860 on Friday.

Source: BERNAMA (News Agency)