Foreign investors have been huge sellers on Bursa Malaysia, withdrawing nearly RM21.3 billion ($7 billion) so far this year. This is the highest annual net outflow since at least 2010. Foreign ownership, which had fallen to just 21.4% as at June 2020 — the lowest level in a decade — would probably have dropped further. In fact, foreign portfolio funds have been taking money out of the stock market every year since 2014, except in 2017.

As we wrote a couple of weeks back, robust trading volumes on the stock exchange so far this year are attributed mainly to domestic retail investors, many with excess cash from the six-month automatic loan moratorium. This source of liquidity will dry up, however, when the moratorium ends this month. While we do not think it will trigger a price collapse, it is likely to take the wind out of the current momentum rally.

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