Foreigners pull most cash from Malaysian stocks since 2013

KUALA LUMPUR ― Malaysia's stock market has seen an acceleration of foreign selling to the highest level in four years after Dr Mahathir Mohamad’s unexpected election upset, though the benchmark equity index rebounded last week.

Overseas investors sold US$625 million worth of equities last week, Malaysia’s biggest stock outflow since August 2013, according to data from Bursa Malaysia, the country’s stock exchange. The selloff is pushing it to the brink of wiping out this year’s almost US$1 billion of foreign inflows.

Newly-minted Prime Minister Mahathir’s attempt to soothe investor jitters by introducing a team of five advisers well-known in official and business circles in Malaysia, might have been in vain.

For the year, foreign inflows now stand at US$10.3 million as of Friday, a sharp drop from the US$937.8 million figure recorded on April 30, data showed.

So what’s keeping the stock market afloat? The price of oil has rallied, which will help boost government revenue and oil and gas contractors in Malaysia.

There are also local funds that believe Dr Mahathir will follow through with his promise to find ways to boost the stock market and lead a business-friendly administration.

The FTSE Bursa Malaysia KLCI Index rose as much as 0.6 per cent Monday. BLOOMBERG