GAINS in Malaysian equities since Pakatan Harapan won the 14th general election have not soothed the nerves of some foreign investors, who continue to pull out of local stocks, according to Bloomberg.

The exodus of foreign money threatens to wipe out this year’s almost US$1 billion (RM4 billion) of overseas investments, it said.

Despite the Kuala Lumpur Composite Index inching up 0.4% on the first week of trading following the election results, overseas investors have been steadily taking flight, selling US$625 million of stocks last week, Malaysia’s biggest stock outflow since August 2013, according to data from stock exchange Bursa Malaysia Bhd.

“The main transactions are being done by local funds to support the market along with retail investors,” Danny Wong Teck Meng, chief executive officer at Areca Capital Sdn Bhd, told Bloomberg.

“The local guys are much more confident in the country’s prospects than foreigners.”

Foreign inflows had dwindled to just US$10.3 million as of last Friday, down from US$937.8 million on April 30, according to Bursa data.

Bloomberg reported that despite the outflow, the stock market was still being kept afloat by the rally in global oil prices, helping to boost government revenue and oil and gas contractors in Malaysia.

There are also local funds that believe Prime Minister Dr Mahathir Mohamad will follow through with his promise to find ways to boost the stock market and create a business-friendly administration. – May 21, 2018.