Are Malaysian stocks favored by foreign investors?

Looking at May, Malaysian stocks became popular among foreign investors, and it was the only country market in ASEAN that achieved a net inflow of foreign capital.

The Malaysian Investment Bank pointed out that in May, net foreign purchases in the Malaysian stock market exceeded RM1 billion, which is very different from other ASEAN countries.

“Last month, Indonesia had the largest net foreign capital outflow of RM881 million, followed by Vietnam with RM613 million, followed by Thailand with RM455 million and the Philippines with RM174 million.”

According to the bank's report, the region's net foreign capital outflow for the month was RM635 million, and net sales in April were RM8.8 billion. So far this year, there has been a net net outflow of RM12.6 billion.

As a result, Malaysian stocks have become the best-performing stock market in the region; so far this year, Malaysian stocks have risen 9.8%; in contrast, the Philippines has declined 0.3%, Indonesia has fallen 4%, and Thailand has fallen 5%.

Foreign investment favored technology (38%) in May, followed by healthcare (25%), industry (15%), and construction (13%).

However, the Malaysian Investment Bank said that by the last week of May, foreign investment had reversed, with net sales of RM1.3 billion, partly due to large purchases by local institutions (RM1.1 billion).

At the same time, the bank said that it has raised the basic target for the composite index at the end of this year from 1,550 points to 1,635 points. This is due to the bullish sentiment brought about by the government's recently announced national semiconductor strategy, which has contributed to strong domestic liquidity.

However, analysts are still cautious about factors such as the slowdown in global economic growth prospects, the uncertain timing of the Fed's interest rate cut, and the introduction of targeted subsidies later this year, which is dragging down consumption due to rising domestic inflation.