Foreign funds bought more Malaysian equities in November and are expected to continue their buying spree this month.
Last month, foreign funds bought RM11.5 billion worth of shares, up from RM10.5 billion in October, data complied by the stock exchange show.
“I expect this trend to continue with more money from abroad coming through,” said Edmund Tham, head of research at Mercury Securities.
December traditionally has been a good month for equities.
OSK Investment, in a report, said since 1996, 86 per cent of the time, the month had posted positive returns.
Tham said money has been flowing into Malaysia as well as other countries in Southeast Asia because of the weak US dollar and European debt problems.
Foreign investors were net buyers of local stocks, helping the index to an intra-day record of 1531.99 points on November 10.
They accounted for 28.38 per cent of the total value of trade in November worth RM39 billion, with local institutional funds accounting for 30.16 per cent of the value traded.
International investors’ purchases are at their highest in more than one-and-a-half decade, as low returns from abroad and Malaysia’s own economic liberalisation help attract investments into equities.
The appreciating ringgit, ease of credit and inflow of capital helped push Malaysia as the fastest growing market for mergers and acquisitions in the Asia-Pacific region this year with some RM21.3 billion deals on the table.
Lee Cheng Hooi, Maybank Investment Bank’s head of retail research for equity markets, said that Malaysia was experiencing a bit of a bull run, but its correlations with the Dow Jones are getting tighter.
“They are mirroring the Dow Jones. Going forward, I expect buying to be selective,” he said.
Lee added that retail participation is likely to be stable as currently big funds are dominating the market.
In November, retail buying was strong, with retailers buying RM8.9 billion worth of stocks, as opposed to RM7.6 billion worth of stocks in the month before.
Tham also expects retail participation this month to be stable as Malaysian retail players have been diversifying their investment portfolios.
“It’s just not all about buying stocks here. Some of them are investing on equities in Hong Kong and Singapore, into unit trusts as well as buying properties for speculative purposes,” said Tham.
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