This article first appeared in The Edge Financial Daily on October 24, 2017 - October 30, 2017

KUALA LUMPUR: Foreign funds disposed of Malaysian equities listed on Bursa Malaysia again last week, marking the fifth week of disposal and the longest selling binge this year, according to MIDF Amanah Investment Bank Bhd.

Foreign selling of Malaysian equities on Bursa Malaysia widened to RM71.4 million last week from RM54.2 million the prior week, said the MIDF Research team.

In its weekly fund flow report yesterday, MIDF Research said during the four-day trading week, foreign selling occurred on each day.

“[Last] Tuesday recorded the highest attrition for the week, which amounted to RM29.1 million net as investors shifted to the sidelines to seek cover before the Deepavali holiday [last] Wednesday.

“As the foreign net outflow persisted until [last] Friday, the FBM KLCI took cue, resuming its gradual descent to end the week at 1,741 points, the lowest since April 20 after starting the week at a closing level of 1,754 points,” it said.

The research house said it seemed that the local market was muted while markets elsewhere were bullish amid global developments such as US President Donald Trump’s tax reform progress, commendable earnings at Wall Street and upbeat Chinese economic data.

“We note that although the foreign selling in Malaysia was in conformity with its Southeast Asian peers, the benchmark index in the respective peers tends to be more resilient as compared with Malaysia,” it said.

MIDF Research said the cumulative net foreign inflow into shares listed on Bursa as of last week stood at RM9.4 billion.

Nevertheless, it said the cumulative amount still offset approximately 30% of the total net outflows recorded in the past three years.

The research house also said foreign participation rebounded strongly as the foreign average daily trade value (ADTV) surged by a staggering 60% to reach above the RM1 billion level at RM1.27 billion, the third-highest weekly amount for the year.

“On the other hand, the retail market was somewhat muted as the retail ADTV was slightly unchanged, only declining by 0.04% to RM995.3 million,” it said.

Regionally, it said foreign funds continued to enter Asian markets albeit at a slower pace. Its proxies for Asia were Thailand, Indonesia, the Philippines, Korea, Taiwan, India and Malaysia.

“The provisional aggregate data from the seven Asian exchanges that we track saw investors classified as ‘foreign’ acquire US$535.1 million (RM2.26 billion) net last week, almost one-fourth of the acquisition in the preceding week, which amounted to US$2.04 billion,” it said.

It added that the bulk of the inflow was again dominated by markets in North Asia, with Taiwan taking the lead.