Equities market continues to be well supported by local institutions

KL Bursa. Photo: Bernama

KUALA LUMPUR: Foreign investors remained net sellers in the local equity market last week, recording a lower total net outflow of RM879.57 million from Monday-Thursday against RM930.62 million in the corresponding period from February 24-27. 

Bank Islam Malaysia Bhd said Malaysian equities market continued to be well supported by local institution funds with total net purchases amounting to RM650.67 million.

“Similarly, local retail was net buyer of RM228.9 million during the same period.

“Going forward, we foresee investors would remain guarded in view of Covid-19 spread outside China,” its chief economist, Dr Mohd Afzanizam Abdul Rashid told Bernama today.

He said central banks across the globe seems to take a concerted effort to resuscitate economic growth by aggressively cutting down on policy rates.

This he said, would increase the appeal of fixed income securities such as government bonds due to the inverse relationship between bond prices and the interest rate.

“We foresee portfolio managers would tend to place their interest in bonds or Sukuk in anticipation that yields could go lower, in tandem with the expected decline in the interest rate set by the central bank,” he said.

He said with interest in bonds and Sukuk heightened, it would mean bond prices could go higher and therefore, investors could lock some gains, as a result.

“We have seen the 10-year US Treasury yields fell to below 1.0 per cent. Currently, the 10-year yield for the US Treasury bonds stood at 0.90 per cent, lower by 25 basis points from end February,” Mohd Afzanizam said.

Similarly, he said, the 10-year Malaysian Government Securities yield has touched an all-time low of 2.78 per cent on March 2, before rebounded to 2.86 per cent on March 5.

“The shifting in asset class could limit the upside potential in the equities market,” he noted. – Bernama


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