KUALA LUMPUR, Nov 3 — The net inflow of foreign funds into the local equity market has been on an uptrend, as outflow continued to decrease month-on-month (m-o-m), marking a possible end to the downtrend for this year.
Inter-Pacific Securities Sdn Bhd head of research, Pong Teng Siew said based on the pattern, there will be an increase in net inflow in the coming weeks as Bursa Malaysia has already hit its lowest mark for the year.
“The stock market has approached the lowest level for the year, as well as a four-year low at 1,548.45 points. Since, then, the market has showed signs of recovery, and in reaching a six-week high on Wednesday at 1,597.98,” he told Bernama.
Based on the data recorded, August recorded the largest net outflow of RM2.59 billion and the net selling continued to decrease to RM550.01 million in September and narrowed to RM484.55 million in October.
On a-week-on-week basis, from Tuesday to Thursday due to a holiday shortened week, an inflow of RM3.46 million was recorded compared with RM302.36 million last week.
On Friday, the benchmark FTSE Bursa Malaysia KLCI closed at 1,593.34, a climb of 23.34 points from last week’s close.
On the ringgit front, Pong said the ringgit is currently being traded at a fair value of 4.1700-4.1840 against the US dollar and would continue to trade range bound in the coming week.
“This is an exception from Friday’s ringgit climb as the US dollar weakened significantly due to the third rate cut by the US Federal Reserve yesterday,” he added.
Meanwhile, an analyst said the market barometer will continue to be influenced by the US-China trade jitters, despite US President Donald Trump stating a deal between the two economic superpowers would be completed soon.
“Despite the announcement that Trump and his Chinese counterpart Xi Jinping would sign a phase one trade deal, the market still remain uncertain of the outcome,” she added.
On the oil front, she said the benchmark Brent crude still remained on the defensive side, in maintaining between US$57 per barrel to $63 per barrel, which would have a minimal impact on the ringgit next week.
As for the trade spat between Malaysia and India, she said the market would not be dragged on for too long, as both countries would find an amicable solution soon.
On Friday, the ringgit closed at 4.1640/1670 against the greenback.
Over the short week, the local market as well as the ringgit’s performances was driven mainly by the US-China trade talks, the third interest rate cut by the US Federal Reserve (US Fed), as well as US economic data.
As for next week, investors will watch closely Bank Negara Malaysia’s announcement on its overnight policy rate on Tuesday (Nov 5), following the rate cut by the US Fed.
“We believe BNM will maintain the OPR rate in this sitting as local data showed that the local economy and consumption is still on a healthy trend,” the analyst said.