Foreign selling on Bursa Malaysia slows during Hari Raya

[MALAYSIA]
The rate of foreign selling on Bursa Malaysia slowed dramatically during the holiday-shortened Hari Raya week, with net outflows of RM426.6 million. This represents a significant decrease from the RM1.15 billion reported the previous week, according to MIDF Research.

Key Highlights of Market Activity

Sectoral Trends: The industries with the biggest net foreign outflows were industrial products and services (RM249 million), financial services (RM247.6 million), and technology (RM128.4 million). The only sectors that received net foreign inflows were utilities (RM72.6 million) and Real Estate Investment Trusts (REITs) (RM15.7 million).

Local participation: Local institutions extended their strong purchasing streak for the 24th consecutive week, accumulating RM369.1 million net, while local retail investors returned to net buying with RM57.5 million net this week.

Trading Volume: The average daily trading volume fell across the board, with foreign investor involvement down 11.7% and domestic institutional activity down 28.8%. However, local retail involvement rose modestly, by 2.2%.

Broader Trends in Foreign Investment

Foreign selling of Malaysian equities has been on a steady slide in recent years, with foreign ownership of Malaysia's market capitalization at a record low of 19.6% as of February 2025.Analysts relate this tendency to global economic uncertainty, geopolitical threats, and poor corporate earnings seasons.

Despite these issues, some international investors are transferring their capital to safer Malaysian assets like Treasury Bills and money market instruments, indicating a preference for liquidity in the face of volatility.Bank Negara Malaysia's overseas reserves have continuously increased, indicating stability in Malaysia's financial markets.

Implications for Bursa Malaysia

The pause in foreign selling during Hari Raya week provides a brief respite for Bursa Malaysia, which has seen consistent outflows in recent months. Analysts believe that unless there is a big shock—such as rising trade disputes or policy shifts—the amount of overseas selling may stabilize.However, there are concerns that persistent selling pressure could rival the intensity observed during prior crises like the COVID-19 epidemic.

Market analysts are constantly monitoring global developments and domestic policy changes that may impact market mood further. While domestic institutions continue to support the market, continuous foreign investment is critical for long-term growth in Malaysia's equities sector.

For the time being, Bursa Malaysia appears to be navigating tumultuous waters with some resilience, thanks in part to increased participation from local investors during moments of heightened uncertainty.