Foreign investors returned to Malaysian equities in July, with buying concentrated in Financial Services, Transportation and Logistics, and Utilities, according to MBSB Research’s latest Weekly Fund Flow Report.
Foreign institutions recorded RM300.9 million in net inflows on Bursa Malaysia during the month, ending two consecutive months of net selling. Financial Services attracted the largest inflow at RM1.11 billion, followed by Transportation and Logistics at RM367.2 million and Utilities at RM305.6 million.
The recovery was not broad based. Industrial Products and Services recorded RM759.7 million in net foreign outflows, while Technology saw outflows of RM484.9 million. Consumer Products and Services also registered RM212.8 million in net selling.
The pattern continued during the final week of July. Foreign institutions recorded RM11.1 million in net buying, with Transportation and Logistics receiving RM107.4 million in inflows. Financial Services and Healthcare led the weekly sector inflows at RM216.5 million and RM148 million respectively.
Imran Yassin Yusof, Head of Research at MBSB Research, said the distribution of the inflows offered a more useful indication of investor sentiment than the overall figure alone.
“The return of foreign buying is a constructive signal, but the composition of the flows is more telling than the headline figure. Inflows were concentrated in Financial Services, Transportation and Logistics, and Utilities, while Technology and Industrial Products and Services continued to see selling.
“In our view, this reflects a more selective allocation of capital towards sectors offering clearer earnings visibility, stronger domestic relevance and more defensive characteristics. Even so, one month of inflows does not establish a durable trend. Elevated producer prices, softer leading indicators and uncertainty over global interest rates could continue to shape investor appetite in the coming months.”
The July inflows came against a mixed economic backdrop. Malaysia’s producer price inflation accelerated to 9.2 per cent year on year in June, its strongest annual increase since June 2022, driven largely by supply chain disruptions linked to the Middle East conflict.
At the same time, Malaysia’s Leading Index declined 0.5 per cent month on month in May, with annual growth moderating to 0.8 per cent. MBSB Research said this pointed to a softer near-term economic outlook.
Global monetary conditions also remain uncertain. The United States Federal Reserve, Bank of England and Bank of Japan kept their respective policy rates unchanged in July, although dissenting policymakers at each central bank favored tighter policy.
This indicates that inflation risks remain part of the global investment outlook despite some moderation in price pressures.
The broader regional picture remains cautious. Across the eight Asian markets monitored by MBSB Research, foreign investors were net sellers for a sixth consecutive week, recording USD1.19 billion in outflows. Malaysia was among the markets receiving inflows, alongside India, South Korea, Indonesia, Thailand and the Philippines.
Against this backdrop, the renewed interest in Transportation and Logistics and Utilities provides a timely signal for industries connected to trade, mobility, energy and industrial development.
The sector classifications used in the fund flow report do not correspond directly with individual financing programmes. They nevertheless indicate where foreign investors are finding relative confidence within the Malaysian market.
MBSB Bank has committed RM1 billion each to rail, aerospace, automotive and solar. These commitments are intended to support the wider development of industries that require investment in equipment, technology, working capital and capacity expansion.
Through its wider collaboration with industry bodies and development agencies, the Bank is also working to identify credible projects and connect companies with the support required to move from planning to commercial execution.
This includes a separate RM1 billion financing line for eligible businesses, investors and strategic projects across the Northern Corridor Economic Region. The allocation is intended to support companies establishing operations, expanding capacity and participating in major supply chains.
The Northern Corridor partnership also provides a platform for businesses across advanced manufacturing, electrical and electronics, logistics, agribusiness and the digital economy.
The wider economic activity generated by these investments can create opportunities for contractors, suppliers, transport providers, professional services firms and SMEs seeking to enter more sophisticated supply chains.
MBSB Research said the return of foreign buying was encouraging but should be assessed over a longer period before being regarded as a sustained reversal.
The July data suggest that foreign investors are again examining selected areas of the Malaysian market. Whether that interest develops into a more durable trend will depend on earnings delivery, economic conditions and the ability of strategic industries to convert capital interest into productive investment and business growth.
Leave a Reply