The investment bank said in its research note that the Asean region had posted a net foreign equity outflow of RM635 million, compared to RM8.8 billion in April 2024, leading to a year-to-date (YTD) outflow of RM12.6 billion.
It said that last month, Indonesia registered net foreign outflows of RM881 million, followed by Vietnam RM613 million, Thailand RM455 million, and the Philippines RM174 million.
“As the ringgit appreciated by 1.3% in May, the FTSE Bursa Malaysia KLCI (FBM KLCI) likewise rose as foreigners reversed purchases of RM1.5 billion, while local institutions were net sellers at RM978 million.
“38% of the May net foreign purchases were in the technology sector, followed by healthcare (25%), property (15%), and construction (13%),” it added.
The bank said that with support from foreign institutional buying activities, which exceeded local selling, the FBM KLCI had posted a YTD rise of (+9.8%) compared to the Philippines’ (-0.3%), Indonesia’s (-4%), and Thailand’s (-5%).
“However, towards the last week of May, foreigners switched back to net selling with RM1.3 billion, partly cushioned by RM1.1 billion of local institutional purchases,” AmInvestment said.
Meanwhile, the bank said it has raised the base-case end-2024 FBM KLCI target to 1,635 (from 1,550 earlier), propelled by robust domestic liquidity amid bullish sentiments from the government’s recently unveiled National Semiconductor Strategy.
“Even with the higher KLCI target, we remain cautious of slowing global economic growth prospects and less-optimistic expectations of the timing of the US Federal Reserve cuts, which will drive volatility across all markets.
“Additionally, we are concerned about moderating domestic consumption amid rising domestic inflation from targeted subsidy rationalisation later in the year,” it said.
AmInvestment also viewed these downside risks could be partly mitigated by improving local institutional liquidity.
Moreover, AmInvestment noted that Malaysian equities offer decent corporate earnings prospects, compelling dividend yields of 4%, and low foreign shareholding of 19.6% amid reinvigorated expectations of infrastructural rollouts on a firm government mandate.