Following was a positive news reported in a local media recently. For the first 6 months of 2016, the total outflows by foreign investors only amounted to RM48.6 million in total. Yes, this is considered extremely healthy. In 2015, there was a total of RM19.5 billion net outflows while in 2014, it was RM6.5 billion. One fund manager was reported to say that if investors are looking for yield, they would naturally return to emerging markets. Malaysia is one investment destination which is assured.
Another bank-backed research house pointed out that for the first five months this year, the foreign investors had steadily been holding about 22 percent of total shareholdings on Bursa Malaysia. he said that should there be any surprise upside in new economic data, some major inflows may be coming back for popular Malaysian blue chips. He prefers utilities and real estate investment trusts because of more predictable revenue base and good dividend prospects.
For those who bought unit trusts, do note that as per MIDF market data, the local funds have purchased at least RM3.97 bil worth of shares in each of the past seven weeks. As per the research house, these are some of the companies which has seen major inflows. They include Malayan Banking Bhd, CIMB Group Holdings Bhd, Bumi Armada Bhd and Top Glove Corp Bhd. Regardless of what the analysts and the foreign investors are doing, always note that Warren Buffet has this to say. “A good business would soon be reflected in its share price.” In other words, stay focussed on good companies with strong business fundamentals.
Stocks were not the only positive. Ringgit has been on an uptrend too, despite falling right after Brexit referendum. Today (11 July), Ringgit closed at RM3.993 versus US$. (Yes, BELOW RM4 mark). It’s also a huge relief financially for those with kids in Britain. It’s now RM5.13 per Pound, substantially lower than right before Brexit results. Foreign investors bought local bonds ahead of BNM’s monetary policy meeting later this week. The five year yield is now at 3.243 percent, the lowest since June 2013. Do note that for yield, the lower is better. It meant investors are more confident with the country and is not buying because of extremely high yield which may also indicate the riskiness of such bonds.
End of positives report for 11 July 2016
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