PETALING JAYA: After a long hiatus, foreign investors appear to have returned to the Malaysian market as they have turned net buyers of Malaysian stocks, snapping up over RM1bil worth of shares so far this year after shunning local equities for the most part of 2021.
So far in 2022, international funds have been net buyers on Bursa Malaysia for four out of six weeks, according to MIDF Research.
The broker noted that net foreign buying last week by investors from abroad was the highest for the year at RM749.34mil, it said in a report on Monday.
Foreign investors were gobbling up stocks in the plantation, industrial and finance sectors, according to CGS-CIMB in its examination of buying trends on Bursa Malaysia last week.
Coming off a low that had seen foreign shareholding in Malaysia hitting a multi-year low, the recent buying spree by foreign investors was visible yesterday as plantation stocks were prominent among the list of top gainers as the FBM KLCI closed up 1% or 15.77 points to just a shade below 1,600 points.
KLK plantation
Among the top gainers yesterday were shares of Kuala Lumpur Kepong Bhd (pic above) and Genting Plantations Bhd, both of which contributed to the spurt in the Bursa Malaysia Plantation Index in recent days that saw the index that tracks the planters sprint up 16.85% year-to-date.
Buying of banking stocks has also lifted the finance index up 5.7% since the start of the year. In comparison, the FBM KLCI is up 2.05% so far this year.
“This helped raise foreign investors’ year-to-date net buys of Malaysian equities to RM1.05bil, with their top three net buy stocks last week being Press Metal Bhd, Public Bank Bhd and Malayan Banking Bhd,” CGS-CIMB told its clients in a report.
Notably, in the week that just ended, local institutions were active sellers.
According to MIDF Research, retailers were also net sellers in the same week, with the largest net selling recorded on Thursday at RM64.83mil.
Analysts said current foreign interest was being supported by the encouraging economic data that had been released in recent days, namely, Malaysia’s Industrial Production Index which was up 5.8% year-on-year (y-o-y), distributive trade sales which increased 3.5% y-o-y, and gross domestic product or GDP, which saw a growth of 3.6% in the fourth quarter of 2021. The newly-released GDP figures beat earlier estimates.
Bank Negara said in a statement that economic recovery was aided by a recovery in the labour market as well as continued policy support.
In addition, strong external demand amid the continued upcycle in global technology provided a further lift to growth.
For the whole of 2021, the central bank said the economy grew 3.1%, while the unemployment rate declined to 4.6%.
Headline inflation, meanwhile, grew 3.2% during the quarter, in line with Bank Negara’s expectations, mainly due to a normalisation in electricity prices following the lapse of the three-month electricity bill discount implemented in July 2021.
According to information on Bursa Malaysia’s website, the local market ended last year with a net foreign outflow of RM3.15bil.
“Foreign investors remained net sellers for the first seven months of the year, owing to political uncertainties and nationwide lockdowns in tandem with rising Covid-19 cases.”
However, foreign investors turned net buyers starting in August following the appointment of the new Cabinet, it said, noting that the net buy momentum began to taper off in November, attributed to the impact of the proposed prosperity tax and stamp duty hike in Budget 2022.