KUALA LUMPUR: Malaysia recorded net foreign equity inflows exceeding RM1 billion in May 2024, making it the only Asean country in the month to achieve this milestone, according to AmInvestment Bank Bhd.

The Asean region posted a net foreign equity outflow of RM635 million, compared to RM8.8 billion in April 2024, leading to a year-to-date (YTD) outflow of RM12.6 billion, said the bank in a research note today.

It said that last month, Indonesia registered net foreign outflows of RM881 million, followed by Vietnam RM613 million, Thailand RM455 million and the Philippines RM174 million.

"As the ringgit appreciated by 1.3 per cent in May, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose likewise as foreigners reversed to purchases of RM1.5 billion, while local institutions were net sellers at RM978 million.

"38 per cent of the May net foreign purchases were in the technology sector, followed by healthcare (25 per cent), property (15 per cent) and construction (13 per cent)," it added.

The bank said that with support from foreign institutional buying activities, which exceeded local selling, the FBM KLCI posted a YTD rise of +9.8 per cent versus the Philippines's -0.3 per cent, Indonesia's -4 per cent and Thailand's -5 per cent.

However, towards the last week of May, foreigners switched back to net selling with RM1.3 billion, partly cushioned by RM1.1 billion of local institutional purchases, AmInvestment Bank said.

Meanwhile, the bank said that it has raised the base-case end-2024 FBM KLCI target to 1,635 (from 1,550 earlier), propelled by robust domestic liquidity amid bullish sentiments from the government's recently unveiled National Semiconductor Strategy.

"Even with the higher KLCI target, we remain cautious of slowing global economic growth prospects, less-optimistic expectations of the timing of the United States Federal Reserve cuts, which will drive volatility across all markets, and moderating domestic consumption amid rising domestic inflation from targeted subsidy rationalisation later in the year.

"In our view, these downside risks could be partly mitigated by improving local institutional liquidity, while Malaysian equities offer decent corporate earnings prospects, compelling dividend yields of four per cent and low foreign shareholding of 19.6 per cent amid reinvigorated expectations of infrastructural rollouts on a firm government mandate," it said.

 - BERNAMA