PETALING JAYA – Malaysia has emerged as the most favoured emerging market in South-East Asia year-to-date based on foreign liquidity flow in the local stock market, beating Thailand, Indonesia and the Philippines.
Overseas investors were again net buyers of Malaysian equities, adding RM180mil worth of stocks yesterday to their portfolio.
They have so far this year pumped close to RM6bil into the local stock market.
The inflow reversed the RM3bil outflow seen last year.
“The strong foreign liquidity flow into local equity is an inevitability that the market has been waiting for,” MIDF Research said.
The FBM KLCI added 5.40 points, or 0.3%, yesterday to 1,745.49 points, opening its account in the second quarter on a strong note.
The index is up 6.3% so far this year, rising faster than bourses in Indonesia and Thailand.
“Relatively low foreign ownership of stocks, strong corporate fundamentals and an unjustifiably weak currency makes Malaysian equity hard to ignore,” MIDF Research said.
The FBM KLCI is projected to record a 7.2% and 8.3% growth in earnings for the financial years 2017 and 2018, according to AmInvestment Bank in a recent note, against the backdrop of a more stable currency outlook.
The ringgit exchange rate against the US dollar steadied at 4.427 yesterday.
According to MIDF Research, foreign liquidity flow to Bursa Malaysia had remained elevated for the third consecutive week, with foreigners buying RM1.14bil worth of shares in the open market during the week ended March 31.
The net foreign inflow excluded off-market deals.
For regional comparison, net foreign inflows to Malaysian equities in the first quarter totalled US$1.29bil (RM5.71bil), the highest within the emerging Asean market.
This compared with Thailand, which saw total net foreign inflows of US$680.3mil into its equities, and Indonesia, which registered net foreign inflows of only US$184.9mil into its equities.
The Philippines, on the other hand, has registered net foreign outflows of US$347.9mil from its equity market year-to-date.
MIDF Research pointed out that for the week ended March 31, foreign participation on Bursa Malaysia remained at an elevated level, with the foreign average daily trade value at RM1.05bil.
This compared with RM1.26bil in the preceding week.
In general, Bursa Malaysia had seen eight consecutive weeks of net foreign inflows.
“As of last Friday, foreign net buying had extended for 15 trading days, the longest streak since March last year,” MIDF Research said.
Cumulative foreign net purchases in March 2017 totalled RM4.7bil, which represented a four-fold increase from RM956mil in the preceding month.
In the region as a whole, said MIDF Research, global money flow into Asian equities had remained strong for the fourth week running.
Statistics compiled by the brokerage on net foreign purchases in the seven Asian markets that it tracked totalled US$2.94bil for the week ended March 31.
This compared with US$2.06bil in the preceding week.
Elsewhere, stocks in Indonesia hit a record high yesterday with the benchmark index at 5,606 points on better-than-expected earnings for the quarter ended March.
Markets in the region continued their rally in March, buoyed by growing evidence that further interest rate hikes in the United States will come at a gradual pace.