“Foreign Selling of Malaysian equity at a total of RM11.08 billion …. MIDF Research”
By Stella Goh – As published in Inve$t Malaysia 15 May 2020 issue
On Sunday (10May), PM Tan Sri Muhyiddin Yassin announced the fourth extension of the movement control order (MCO) with further loosened restrictions under the conditional MCO (CMCO) for another four weeks from May 13 until June 9. Since the period will cover several major Malaysian celebrations, namely Hari Raya Aidilfitri, Kaamatan Festival and Hari Gawai, when it usually involves in heavy movement of people, such movement will not be allowed.
On Tuesday (12May), the FBM KLCI shed 2.38 points or 0.17% to 1379.93 from previous Friday’s close of 1382.31. The FBM KLCI has reversed the trend and inched up to 1397.25 on Thursday (14May). Based on feedback from Bursa Malaysia, the MCO has had a positive impact on its trading activity.
For YTD April 2020, Millennials were responsible for 49% of total new individual accounts opened. For the same period, Retail investors continued to post a net buy position of RM4,011mil. And the Retail Net Buy Position YTD Apr 2020 is currently higher than FY2019.
Malaysia’s Industrial Production Index (IPI) dropped 4.9% in March 2020 from a year earlier due to the decrease in all three components (manufacturing, electricity and mining) of the index. According to the Statistics Department, the IPI’s manufacturing component fell 4.2% in March 2020 after recording an increase of 6.2% in February 2020. The major sub-sectors contributing to the decrease in the manufacturing sector in March 2020 were electrical and electronic products (-5%), non-metallic mineral products, basic metal and fabricated metal product (-9.8%), food & beverage and tobacco (-9.9%). While the electricity index and mining index recorded a reduction of 0.4% and 1.8% respectively.
According to MIDF Research, the foreign selling of Malaysian equity swelled almost nine times to RM774.1 million last week from RM87.6 the prior week. Based on the weekly fund flow report on Tuesday (12May), the foreign investors have so far taken out RM11.08 billion net of equities from Malaysia. In comparison to the other six Asian peers, Malaysia remains as the nation with third smallest foreign net outflow on a year-to-date basis after Indonesia and the Philippines.
Bank Negara Malaysia (BNM) stated that Malaysia’s average headline inflation in 2020 is likely to turn negative due to mainly projections of substantially lower global crude oil prices and other commodity prices including food as well as evolving demand conditions. Malaysia’s economic growth in gross domestic product (GDP) terms has dipped sharply to 0.7% in 1Q20 (4Q19: 3.6%) which is the lowest since third quarter of 2009 due to the impact of measures taken both globally and domestically to contain the spread of Covid-19 pandemic.
According to BNM, during the first quarter (1Q20), headline inflation remained modest at 0.9% mainly reflecting the lapse in the remaining impact from Sales and Services Tax (SST) implementation and lower price-volatile inflation. The core inflation moderated slightly to 1.3%. BNM also stated that the sizeable fiscal, monetary, and financial measures and progress in transport-related public infrastructure projects will provide further support to growth in 2H20. In line with projected improvement in global growth, the Malaysian economy is expected to register a positive recovery in 2021.
According to the Senior Minister of International Trade and Industry Datuk Seri Mohamed Azmin Ali, the government will announce a six months short-term recovery plan by the end of May to revive the economy. Following the recovery plan, government also plans to table a medium-term revitalization plan under the 2021 Budget in November, followed by a long-term reform plan which will be under the 12th Malaysia Plan that is scheduled to be revealed in January 2021.
This week, on Thursday (14May) the Ringgit was 4.3405 against USD from 4.3336 on Monday (11May). Meanwhile the Sing Dollar to Ringgit was 3.0513 on Thursday (14May). As at Friday (15May) 10:00 am, the FBM KLCI was at 1402.52