Tuesday, 6 June 2017

(The Star) Bursa climbs to two-year high

Inflow from abroad breaches RM10bil, biggest in the region

PETALING JAYA: Shares on Bursa Malaysia climbed to a two-year high, boosted by a steady inflow of funds from overseas as the corporate earnings outlook brightens.

The ringgit advanced 0.4% to 4.2633 against the US dollar, its highest since November last year.

Foreign investors bought Malaysian shares for the 17th straight week with a total year-to-date inflow of RM10.14bil, according to MIDF Research.

This year-to-date net inflow was higher compared with other countries in South-East Asia, namely, Thailand, Indonesia and the Philippines.

“Foreign participation remained vibrant,” MIDF said, adding that the average daily trade value of foreign investors surged to RM1.95bil, the highest since a year ago.

Yesterday, the FBM KLCI ended 11 points or 0.62% higher to 1,787.95 points, a level last seen in May 2015. The index was up 9% since early this year, faster than the Indonesian and Thai bourses.

AmInvestment Bank has maintained its forecast on the FBM KLCI to end the year at 1,745 points and 1,900 points at end-2018, based on 17.5 times its 2017 and 2018 forecast earnings.

It pointed out that the valuation, which is a five-year premium, could be justified by stronger corporate earnings backed by stronger economic growth in 2017 and 2018.

In its recent report, the research house said it expects cyclical sectors such as banking, property and consumer to be back in vogue in the second half of the year.

“Also, small and mid-cap stocks could be in the limelight, thanks to the government’s mandate in Budget 2017 to allocate up to RM3bil to invest in this space,” AmInvestment Bank said.

It also prefers large-cap companies with resilient earnings that have exposure to the construction and power sectors.

In the month of May, Malaysia’s exports rose 20.6% to RM73.79bil from RM61.34bil a year ago, which was within economists’ forecasts.

Imports during the month jumped 24.7% to RM65.21bil, bringing total trade in April 2017 to RM139.2bil, an expansion of RM25.5bil or 22.5% from a year ago.

Meanwhile, MIDF said that last week, Asia saw the first outflow of foreign money in six weeks.

“Global funds retained their conviction in emerging South-East Asian markets, although there was a seemingly large exodus from Indonesia,” it said.

It said that in Indonesia, foreign investors offloaded US$535.9mil (RM2.3bil) net last week.

“The bulk of the outflow was on Monday when US$486.9mil net of stocks was sold, the largest since March 2011.

“This is probably due to portfolio rebalancing to reflect changes in MSCI weightings,” MIDF said.

Elsewhere, all the key regional markets were trading in red yesterday, except for Bursa Malaysia and the Shanghai Composite Index.