By Lee Wei Lian
KUALA LUMPUR, July 6 — Foreign funds and local retail investors sold more Malaysian equities in June than they bought despite the benchmark FBM KLCI Index moving up about two per cent during the month, according to figures provided by Bursa Malaysia.
Local institutions, however, were net buyers of equities to the tune of RM1.8 billion.
June trade statistics show that foreign institutions sold RM8.9 billion worth of shares in June and bought RM8.1 billion.
Local retail investors sold RM4.8 billion and bought RM4.4 billion.
Local institutions sold RM13.2 billion and bought RM15 billion.
Analysts say that the FBM KLCI index surged into record territory in recent days due to ample liquidity, expectations of further economic stimulus in advanced countries and the pre-general election effect.
It was also boosted by the second largest IPO in the world this year — Felda Global Ventures Holdings which soared 20 per cent when it debuted on June 28.
RHB Research Institute said in a research note on Tuesday that the equity market will likely be stuck in a range-bound trading pattern but will likely trend up in the later part of the year as global economic uncertainties clear up.
It added that global financial markets are still likely to be awash with liquidity and said that its end-2012 FBM KLCI target remained at 1,650.
Malaysia, which is seeking to break out of the middle-income trap and leap into the ranks of high-income economies, is targeting a foreign direct investment (FDI) of RM33 billion this year, International Trade and Investment Minister Datuk Seri Mustapa Mohamad has said.
But a local investor told The Edge Financial Daily in a report published today that foreign investors have been sidelining Malaysia’s emerging market in favour of Brazil, Russia, India, China and other burgeoning economies.
“If investors can buy shares in India, China at seven to 10 times earnings and at three per cent, why would investors come to Malaysia and pay 12 to 14 times earnings for stocks that only provide a two per cent yield,” Dennis Lim, who is chief executive of Templeton Asset Management Ltd, told the business paper.
The paper reported him as saying that Bursa Malaysia needs more local companies to make multimillion ringgit debuts on the local bourse, such as the RM3.1 billion FELDA Global Ventures Holdings (FGVH) IPO which was the world’s biggest listing after Facebook this year.