KUALA LUMPUR (March 7): Foreign shareholdings of Malaysian equities fell 0.2 percentage points (ppts) month-on-month to 20.4% at end-February 2023 (versus 20.6% at end-December 2022).
In a strategy note on Monday (March 6), CGS-CIMB Securities said the declining trend in foreign shareholdings started in May 2018, specifically after the 14th general elections (GE14) on May 9, 2018, when Pakatan Harapan (PH) won a simple majority in Parliament, heralding the first change in government in Malaysia’s history.
The research house said since then, the foreign shareholding level has fallen 4.1 ppts from its peak of 24.2% in March 2018 to a trough of 20.1% in August 2022, due to political uncertainty.
“Foreign shareholdings have recovered slightly after the 15th general elections (GE15) on Nov 19, 2022 and stood at 20.4% at end-February 2023.
“Year-to-date as at March 3, 2023, foreign investors have net sold RM686 million of Malaysian equities (against net buys of RM4.4 billion in 2022),” it said.
Financial services the largest sector by market capitalisation
CGS-CIMB said Bursa Malaysia splits the 985 companies listed on the stock exchange into 14 broad sectors.
It said the performances of the companies listed on the main market in same-sector classifications are captured under the Bursa Malaysia Sectorial Index Series.
The inclusion of a company in a sector depends on the company’s main source of operating revenue, it said.
“For our sectorial fund flow analysis in this report, we examine all companies listed on the stock exchange, not just those listed on the main market.
“To provide some perspective, the top three largest sectors in Bursa Malaysia by market cap on March 3, 2023 were financial services (23.3% of total), consumer products and services (16.2%), and industrial products and services (13.3%).
“As of March 3, 2023, the three sectors with the highest number of constituents were industrial products and services (28.2% of total), consumer products and services (20.9%), and technology (11.2%),” it said.
The research house said local institutional investors were the largest net buyers and they net bought Boustead Holdings Bhd and CIMB Group Holdings Bhd.
It said retail investors were the second largest net buyers last week, net buying Malayan Banking Bhd and Hartalega Holdings Bhd.
“We expect the market to remain range-bound due to concerns about earnings risk,” it said.