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Economist say foreign selling shrinks to RM27.8m last week | Money

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The FBM KLCI index followed suit to close 0.8 per cent higher at 1,512.4 points on the same day in conformity with other regional markets. — Bernama pic

KUALA LUMPUR, Oct 12 — Foreign investors continued to dispose of local equities last week, albeit at a modest amount of RM27.8 million net of local equities last week compared to an enormous volume of RM543.7 million in the preceding week.

This is the second smallest weekly foreign net outflow recorded so far in 2020, says Bank Islam Malaysia Bhd economist Adam Mohamed Rahim.

He said Bursa Malaysia started the week on the right foot as international investors snapped up RM34.3 million net of local equities on Monday.

The FBM KLCI index followed suit to close 0.8 per cent higher at 1,512.4 points on the same day in conformity with other regional markets.

“Concerns on rising global Covid-19 infections on Monday were overshadowed by President Donald Trump’s improving health condition which helped calm investors’ nerves with regard to political uncertainty,” he told Bernama.

Adam said on Tuesday, however, foreign investors disposed of RM66.8 million net of local equities, wiping off Monday’s foreign net inflow.

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Profit-taking activity was prevalent in glove makers such as Top Glove and Hartalega, with both recording a 3.1 per cent decline on Tuesday.

“This was despite the regional upbeat mood following reports that there was still potential to reach an agreement with the US lawmakers on more coronavirus reliefs, especially with President Trump said to be leaving the hospital after receiving treatment for virus,” he said.

The mood turned sombre on Wednesday as Trump ordered a stop to talks on another round of aid for the economy until after the presidential election.

As such, international investors dumped RM161.4 million net of local equities, dragging the FBM KLCI 1.3 per cent lower to close below 1,500 points while other Asian peers such as South Korea and Taiwan were all in the green zone.

Offshore investors made their way back to Bursa Malaysia on Thursday albeit at a measurable level of RM38.6 million net.

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Hopes for stimulus were restored after Trump said he was ready to sign piecemeal measures, including support for individuals, small businesses and airlines.

In fact, the S&P 500 climbed Wednesday to its highest close in over a month after Trump tweeted his support for the said spending packages.

“This helped to partially outweigh the jitters from the political front as (Opposition leader) Datuk Seri Anwar Ibrahim (claimed that he) had been granted an audience with the Yang di-Pertuan Agong tomorrow,” he added.

International investors upped the ante in buying activity on Friday by acquiring RM127.4 million net of local equities as investors showed cautious optimism that the US congress will reach an agreement on fiscal stimulus measures aimed at parts of the economy.

The local bourse took cue of the foreign net buying to close 0.7 per cent higher at 1,530.4 points, a level not seen in more than two weeks.

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On a year-to-date basis, foreign funds have taken out RM22.3 billion net of local equities from Bursa Malaysia.

In comparison with Asian peers, namely South Korea, Taiwan, Thailand, Indonesia and the Philippines, Malaysia still has the third smallest foreign net outflow on a year-to-date basis.

South Korea and Taiwan have the largest year-to-date foreign net outflow of more than US$20 billion each and in terms of participation, foreign investors remain active on Bursa Malaysia with a healthy average daily traded value of more than RM1.0 billion. — Bernama

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