Foreign funds sell Malaysian equities last week at fastest rate in two months

PETALING JAYA- Foreign funds sold Malaysian shares at the fastest rate in two months last week as the appeal of local stocks with expensive valuations and unexciting earnings growth prospects waned with overseas investors.

According to data compiled by MIDF Research, a total of RM6.5billion (S$2.5 billion) in foreign money had exited Malaysian equities in the past 14 weeks,

"It is clear that foreign investors' appetite for Malaysian equity is currently very low,'' its head of research Zulkifli Hamzah said in a report yesterday.

He also noted that the foreign sell-off was also prevalent across the region, with markets such as Indonesia, the Philippines and India taking some hits.

"The selldown last Friday was the highest in a day since Nov 13, when RM427million left the Malaysian equity market amid trepidation over the US Government shutdown," he said.

The FTSE Bursa Malaysia KL Composite Index (FBM KLCI) fell 8 points last week, but ended 8 points higher at 1,834 points yesterday.

MIDF Research said the FBM KLCI was "fundamentally" supported at 1,800 points.

BlackRock Inc, one the largest asset managers in the world, said last week that it was selling shares in Malaysia after the index hit an all-time high of 1,872 points on Dec 30.

Standard Chartered Bank also downgraded Malaysian equity from overweight to neutral, citing unexciting earnings growth prospects compared to markets like China and South Korea,

"At the current level, the FBM KLCI still reflects the state of liquidity in the system. It is local liquidity which is supporting prices,'' Zulkifli said.

He expects the trading mood on Bursa Malaysia to be "lacklustre" this week due to the holidays and believes fundamentals are still weighted towards the negatives this week on the back of lower appetite for equity globally and declining commodity prices.

"Still in the early days of 2014, global investors are keeping a generally neutral exposure towards Asian equity,'' Zulkifli said.

Local institutions, according to MIDF Research, purchased RM584.7million worth of stocks on Bursa Malaysia last week which provided the market with the much needed support.