The Malaysian stock market is in dire need of liquidity (Starbiz, August 17, 2021). Without foreign investors, the market is in the doldrums. There is the other problem, it has become less attractive. Why? Government is in suspended animation, Covid cases continue to be above 15,000, and economic indicators like unemployment, property, retail, tourism, aviation and many others are in bad shape. The bright spots are export-oriented industries, like electronics or glove manufacturing and those in logistics and delivery. As a result, many stocks are trading below 2015-2019 average PE.
Up to August 11, 2021, Bursa Malaysia recorded a net foreign outflow of RM5.9 billion. In 2020, it was a high of RM24 billion. The situation is the same in Vietnam, the Philippines and Thailand.
As at July 2021, foreign ownership of Malaysian stocks is at an all-time low of 20.2%, according to UOB Kay Hian Malaysia Research. The market cap of the Main Market has declined by 4.5% between January and July 2021. The ACE market fell by almost 10%.
Foreign funds return will only be with a more responsive and stable Government in place, vaccination rates have improved significantly and businesses have resumed operation. That at best is around October 2021.
Meanwhile, look at a balanced portfolio with value stocks providing some bargains.
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