KUALA LUMPUR, Mar 1 (Bernama) — Foreign investors disposed of RM477.5 million net of local equities during the final week of February 2021 compared to the RM466.4 million disposed of in the preceding week.

For the month of February, foreign investors sold RM866.9 million net of local equities, marking the 20th consecutive month of foreign net selling.

On a year-to-date basis, international funds have sold RM1.7 billion net of local equities.

"The last time that a monthly foreign net inflow was recorded was in June 2019 at RM134.6 million," Bank Islam Malaysia Bhd economist Adam Mohamed Rahim told Bernama.

He said Bursa Malaysia had a rough start to the week as international investors sold RM255.5 million net of local equities on Monday as rubber glove counters became the major casualties.

"The arrival of the COVID-19 vaccine on Malaysian shores has somewhat dented sentiment on rubber glove counters in terms of lower global demand for rubber gloves.

"As such, the FBM KLCI index closed 0.9 per cent lower on Monday at 1,570.5 points," he told Bernama.

Adam noted that the pace of foreign net selling slowed down to RM137.8 million net on Tuesday before disposing of more on Wednesday to the tune of RM178.5 million net.

In addition, losers led gainers on Wednesday and rubber glove counters continued to be major laggards on the local bourse, coinciding with Prime Minister Tan Sri Muhyiddin Yassin taking his first vaccine jab that day under the National Immunization Program.

 Aside from that, pressures from other Asian markets such as Hong Kong, which unveiled its first stamp-duty increase on stock trades since 1993, weighed on regional sentiment, including the local bourse.

"On Thursday, foreign investors made a modest comeback to Bursa Malaysia, acquiring RM144.4 million net of local equities, the biggest daily foreign net inflow recorded since Feb 2, 2021.

"Thursday's foreign net inflow was in line with the FBM KLCI index's 1.5 per cent jump amid optimism on corporate earnings. Other factors, which aided market sentiment, was US Federal Reserve chair Jerome Powell's reassurance that interest rates would be left unchanged for now," Adam said.

He noted that international investors were back in selling mode on Friday as they sold RM80.1 million net of local equities.

"Perhaps Thursday's rally may have caused some investors to cash in on gains, combined with the slump in the technology sector on Nasdaq triggered by rising bond yields. The local bourse lost 0.2 per cent to settle at 1,577.8 points on Friday," he said.

Separately, MIDF Research, in a note, said major equity markets worldwide saw weak performance following a spike in US Treasury yields last week.

"The yields on the benchmark 10-year Treasury rose as much as 0.16 percentage points to exceed 1.5 per cent for the first time in a year, leading to investors fearing a rise in inflation which proceeded with an equity market sell-off," it said.

It also said the Malaysia's total trade continued to grow on Jan 21 by +4.1 per cent year-on-year (y-o-y) as both exports and imports kept expanding at +6.6 per cent y-o-y and +1.3 per cent y-o-y, respectively.

MIDF expects Malaysia's trade performance to rebound in 2021, carrying over the strong momentum in 2H20 on the back of resumption in activities globally, driven by a return to normalcy in global supply chain.

"Competitive commodities prices and spare capacity will be an additional impetus to the recovery. Vaccine rollout along with massive fiscal and monetary policy support in major economies will boost demand," it said.