KUALA LUMPUR, May 19 (NNN-BERNAMA) — Total foreign net flows from Monday to Thursday this week amounted to RM1 billion compared to RM320.4 million in the same period last week.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said foreign participation during the stipulated time, averaged 30.8 per cent versus vs 29.2 per cent previously, while local institutional net buys amounted to RM934.2 million from RM211.6 million.
“The local institutional participation rate was at an average of 47.8 per cent between May 6-9, while local retail net buys were RM70.7 million versus an expansion of RM108.8 million previously. The participation rate averaged 22.1 per cent from 23 per cent,” he told Bernama.
He said factors that resulted in huge outflows last week were due to heightening trade tensions between the US and China.
In response to the US actions, the Chinese government retaliated by imposing a tariff on US$60 billion goods imported from the country, effective June 1.
“At the same time, the blacklisting of telco giant Huawei and its affiliates by the US Commerce Department seems to suggest that the trade spat between the two countries will not be resolved in the near intermediate term,” said Afzanizam.
He said there would be a public hearing on the US proposal to raise tariffs on a final US$300 billion of imports from China on June 17.
The G20 summit will take place in Japan from May 28-29 with US President Donald Trump set to meet his Chinese counterpart, Xi Jinping.
“As such, the trade war developments will continue to hog the limelight. At the same time, investors will be looking for clues as to whether the US Federal Reserve (Fed) will ease monetary policy at some point in the future.
“Next week, there will be series of Fed members speaking to the public, including Chairman Jerome Powell. There will also be comments from the Reserve Bank Of Australia (RBA) on Tuesday. Again, markets will be watching for signs of a possible easing in monetary policy by the RBA,” said Afzanizam.
Domestically, Afzanizam said April’s Consumer Price Index will be announced on May 24.
“The inflation rate is expected to remain benign for the whole of 2019 as Bank Negara Malaysia reaffirmed the 2019 inflation rate forecast of 0.7-1.7 per cent on May 16.
“So, we expect markets to remain timid next week. Corporate results announcement for the 1QFY2019 will gain more steam next week. So, investors would be scrutinising the potential upside or downside disappointments to the results,” he added.
Meanwhile, M&A Securities Sdn Bhd chief dealing officer R. Sundararajah said the local market had been very volatile for the whole of this week due to the uncertainty over the US-China trade talks.
“It worsened further on Thursday when the US hit Huawei with severe sanctions,” he added.
He said the market is expected to continue to be cautious next week unless there was a positive outcome from the US-China trade negotiations.
NNN-BERNAMA
