Local market, view as one of the most defensive market in the world, suffering the same fate as regional market this round. The correction which started early of August had actually hit our shores too. Who say we are in a better position when market downturn? No one raised their hands now. Ha..aaa.
Historically, our local market is very "Dull" if foreigners do not participate here. KLCI shoot up because there is an in-flow of foreign funds into Bursa Malaysia. During that time, we are very joyful and assumed that they're in for long-term (until recently). Don't be "syok-sendiri laa" bro. Investors are here because they want to make profit. After achieving their goals, what would they do? Of course, taking profit (and bring down KLCI) and left our country.
Then, when is the best time to leave?Now or never. In other words, KLCI went up and go down mainly because of foreign funds. Retail investors definitely do not have the power to muscle the markets. Agree?
Foreign ownership in Malaysia fell to 21.6% in August 2011, as foreigners sold RM3.8bn during that month. Stocks with high foreign shareholding could be vulnerable to a further sell-down in the current negative environment. The said stocks refer to AirAsia, Genting, IJM Corp, CIMB, GenM, Gamuda, in which already seen heavy selling pressure lately.
|Source: Excerpt from Credit Suisse report dated 26 Sept 2011|
Answering the topic question, YES, foreign funds did sell down on Malaysian equities recently. However, those stocks that were battered down may in for a sharp rebound once foreign funds coming back again. Why? Simply because they selected the said companies for some good reasons, and these reasons would ensure them to re-look again if the pessimism of the market is gone.