Tuesday, September 13, 2011

Malaysia suffered heaviest brunt of foreign selling in August vs EM

KUALA LUMPUR: Malaysia took the brunt of the selling in August among the emerging markets, where it accounted for 31% of the total selling when its weighting was only 8%, according to a Credit Suisse Research report.

Data obtained from Bursa Malaysia showed that during August, the 30-stock FBM KLCI fell 110.74 points during the period to end the month at 1,447.27 while RM94 billion was wiped out from the Bursa Malaysia market capitalisation., reducing it to RM1.241 trillion.

Credit Suisse Research noted that Malaysia experienced the largest net foreign selling -- since the series started --'' of RM3.8 billion in August but this was offset by net buying by local institutions of about RM4.8 billion.

'Malaysia saw a net foreign outflow of US$1.3 billion in August versus net selling of US$4.2 billion from the emerging markets (ex-China),' it said.

The research house concluded that the selling of Malaysian equities in August made up for 31% of total selling from emerging markets when compared to Malaysia's weighting of only 8%.

'Year-to-date (January to August), foreign institutions are net sellers of Malaysia totalling'' US$170 million (or only 1.4% of total selling), while emerging markets (ex-China) saw net foreign outflow of US$11.8 billion,' it said.

However, Credit Suisse Research was confident that the Economic Transformation Programme (ETP)'' momentum was expected to pick up in the later part of 2011.

It explained that although Malaysia was a relatively open economy, it believed the economy would be supported in 2011/12 by several measures.

It said the measures included a combination of pump-priming before general elections as the government underspent in the first half of 2011 and could push through spending in 2H to support the economy.

The research house said other factors were that the ETP should pick up in 4Q11 and a resilient domestic consumption from elevated commodity prices, which boosted the rural economy.

'Our top ETP-related picks are Gamuda, IJM Corp, Bumi Armada and RHB Cap,' it said.

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