Another week of net inflow Week 4: Jan 2019

• Stocks ended stronger last week, with KLCI at 1,701.03, rising 8.81 points versus the prior week.

• Again, foreign funds provided support with net buys worth RM455.6m. Meanwhile, both local institutional and retail investors turned net sellers.

• Net foreign inflow MTD Januari now stretches to RM880m. This is despite disappointment in Brent crude oil that fell 2.5% for the week.

• Momentum favours another week of inflow as optimism rises on possible trade spat relief between China-US, ahead of Chinese VP visit to the US at the end of this month.

Seemingly “out-of-favour” sectors shone

Malaysian stocks continued where they left off in the previous week with the KLCI making another solid advance – closing the week above 1,700 for the first time in more than 2 months. Several sectors and stocks that were seemingly out of favour in December, such as gloves and telecommunications, appeared to have regained investors’ confidence last week, as seen in the higher stock prices of Hartalega, TM.

Net foreign inflow continued for the 3rd straight week, offsetting selling activities by institutional and retail investors, who became weekly net sellers for the first time this year. Digi.com kicked off the 4Q18 earnings season with a good set of earnings, which saw the stock eked out a small gain for the week.

Momentum remains positive

Net inflows of funds into Malaysian stocks are again showing positive momentum as the January-to-date amount now stands at RM880m (refer Table 1). As mentioned last week, the inflows are consistent with the trend in Jan 2017, as well as Jan 2016. The prospect of weaker USD – as the Fed is expected be less aggressive in rate rise – and a stable crude oil price, remain the short-term themes for financial markets.

The 2-day visit of Chinese Vice-Premier Liu He to the US on 30 and 31 Jan will be a crucial event as there is speculation US-China might reach a deal to end the trade war. Mr Liu, who is overseeing China’s trade negotiations with the US, is expected to meet the US Trade Representative and US Treasury Secretary.

Source: BIMB Securities Research - 28 Jan 2019