Malaysia witnessed a significant surge in foreign equity inflows in August 2024, marking the highest monthly foreign investment since March 2022. Foreign investors poured MYR2.55 billion into Malaysian equities, up from MYR1.32 billion in July. This sharp increase coincided with the strengthening of the Malaysian Ringgit (RM), driven by expectations of the U.S. Federal Reserve easing its monetary policy.
Year-to-date (YTD), foreign net buying in Malaysia’s equity market has reached MYR3.05 billion, a stark contrast to the MYR2.34 billion net sell recorded in the same period last year. Consequently, market foreign shareholding edged up to 19.8% by the end of August, compared to 19.5% at the close of 2023.
Despite the inflows from foreign investors, domestic institutions (DIs) and retail investors were net sellers in August. DIs offloaded MYR1.7 billion worth of Malaysian equities, while retail investors sold MYR0.84 billion, marking an acceleration from July’s MYR0.75 billion and MYR0.57 billion, respectively. The month also saw a marginal increase in trading activity, with an average daily volume (ADV) of MYR3.8 billion, up 1.4% month-on-month.
The benchmark index, buoyed by the foreign buying spree, closed August at a multi-year high of 1,678.8 points, a level not seen since November 2020. Foreign participation in the market, excluding direct business transactions (DBT), rose to 37.6%, up from 31.9% in July, while DI and retail participation declined to 42.9% and 19.6%, respectively.
In the broader ASEAN region, Malaysia emerged as the second-largest destination for foreign equity inflows in 2024, attracting USD0.69 billion in net buying. This is in contrast to net selling in Thailand and Vietnam, where foreign investors offloaded USD3.35 billion and USD2.54 billion, respectively. Indonesia was the top recipient of foreign investments, drawing in USD1.83 billion YTD.
Foreign investors’ top buys in August included major Malaysian banks such as Public Bank, CIMB, and Maybank, along with Tenaga Nasional and Hong Leong Bank. On the selling side, YTL Power, MISC, YTL Corp, Sime Darby, and MYEG topped the list.
For the year so far, Tenaga Nasional, Maybank, and CIMB have been the most favored stocks among foreign investors, while KL Kepong, RHB, and Nestle saw the most significant outflows.
In the bond market, foreign demand for Malaysian Ringgit-denominated debts rose to MYR7.8 billion in July, the highest in a year. This marks the fourth gain in five months, driven by expectations of a more dovish U.S. Federal Reserve, which in turn strengthened the MYR and attracted substantial bond inflows. Total foreign holdings in Malaysian bonds increased to MYR279.1 billion, nearing the record high of MYR279.2 billion.
Overall, Malaysia’s total portfolio inflow, including both equities and bonds, was a positive MYR9.1 billion in July. Year-to-date, the portfolio inflow stands at MYR9.2 billion, positioning the country as a significant beneficiary of foreign investments in the region.
