Bursa lures fewer foreign purchases in June

Published: 2009/07/29

Malaysian stocks lured fewer foreign purchases in June after net inflows quadrupled the previous month, CIMB Investment Bank Bhd said. Foreign funds bought US$26 million of Malaysian shares in June, less than one-fifth of May’s US$154 million, CIMB analyst Terence Wong said, citing Emerging Portfolio Fund Research, which collects data from more than 600 foreign funds.

“This is somewhat surprising considering that investors are starting to pay more attention to Malaysia, which has lagged behind regional peers in this rally,” Wong said in a report today. Inflows will improve in the coming months, buoyed by the government’s efforts to liberalise the economy, he said. Prime Minister Datuk Seri Najib Tun Razak, who took office on April 3, has announced stimulus plans valued at RM67 billion (US$19 billion) to revive economic growth.

The benchmark Kuala Lumpur Composite Index has risen 34 per cent this year, trailing behind Southeast Asian benchmark indexes. Neighbouring Indonesia’s gauge has jumped 65 per cent.

Wong maintained his “overweight” rating on Malaysia and dropped IJM Corp, RHB Capital Bhd, Genting Bhd and Malaysian Resources Corp from his top-ten list. He replaced them with AMMB Holdings Bhd, WCT Bhd, Sime Darby Bhd and Tenaga Nasional Bhd, according to the report. “Malaysia has become under-researched,” Stephen Hagger, an analyst at Credit Suisse Group AG, wrote in a report today, following a marketing trip to the US.

“We found investors to be very underweight Malaysia,” and are “unaware of the macro changes” introduced by the government, he said. Malaysia remains the most heavily “sold down” market in the region even as purchases by foreign funds resume, Wong said. The country was still a “poor cousin in recent months, as other markets are attracting more investment dollars,” he said. -- Bloomberg