Broker: Maybank Investment Bank Berhad
Date of Report: September 3, 2025

Malaysia’s Equity Fund Flows in August 2025: Foreign Sell-Off Accelerates Despite KLCI Gains

Overview: Foreign Fund Flows Reach Second Highest Outflow in 2025

August 2025 saw a surge in foreign net selling of Malaysian equities, with net outflows reaching MYR3.4 billion—the second highest of the year. Foreign participation in the local market jumped to 42%, up from July’s 38%. The Kuala Lumpur Composite Index (KLCI) bucked the trend with its largest monthly gain year-to-date of +2.7%, led by strong performances in plantations and banks. Despite this, overall foreign investors continued to pare their holdings, marking Malaysia as the top net sold market in the ASEAN-5 region for 2025 year-to-date.

Key Sector Performance: Tech, Financials, and Plantations Lead

– The Tech sector outperformed, followed by Financials and Plantations. – Healthcare remained a laggard, mainly dragged by glove manufacturers. – Construction and REITs were the best-performing sectors year-to-date, while Healthcare continued as a laggard.

Market Participation Trends: Foreigners Gain, Locals Decline

– Equities’ average daily trading value (ADTV), including direct business transactions (DBT), rose to MYR3.0 billion, the highest since March. – Foreign participation (excluding DBT) surged to 42.2%. – Domestic institutions and retailers saw market shares drop to 42.5% and 15.3%, respectively.

Hot Stocks: Top Foreign Buys and Sells in August 2025

Year-to-Date Foreign Net Buy/Sell: Top 20 Stocks

Regional Equity Flows: Malaysia Remains Top Net Sold Market

– Thailand reversed to a foreign net sell position in August. – Indonesia saw a recovery, becoming a net buy market. – All ASEAN-5 markets recorded foreign net sells year-to-date, with Malaysia the most sold, followed by Vietnam and Indonesia.

Bond Markets: Foreign Selling Continues

– Ringgit bond outflows totaled MYR5.5 billion in August, similar to June’s MYR5.4 billion. – The MGS curve stayed resilient despite sustained outflows. – Year-to-date flows remain positive at MYR15.9 billion, but down from May’s peak of MYR26.9 billion. – Foreign share of MGS+GII eased to 21.1%.

Malaysia’s Equity Market: Participation and Holdings Over Time

– Foreign holdings in Malaysian equities fell marginally to 18.8% of total market cap in August, down from 19.0% in July. – Historical data shows a high of 25.2% in May 2013 and a recent low of 20.3% in late 2009/early 2010.

Sector and Index Performance: August & Year-to-Date

Foreign Shareholdings by Company: Detailed Breakdown

Major Economic & Geopolitical Events Impacting Malaysian Equities

– Key events in the last 12 months: US rate changes, tariffs, Malaysia’s budget, global geopolitical tensions, and trade negotiations. – US FOMC lowered target FFR multiple times. – BNM maintained OPR at 3% several times, but cut to 2.75% in July. – Malaysia GDP showed steady growth: 1Q25 +4.4% YoY, 2Q25 +4.4%. – Significant trade/tariff negotiations between Malaysia, US, and China, impacting sentiment and flows.

Regional Comparative Performance (USD Terms)

– Malaysia’s 2025 YTD performance ranks in the middle among Asia-Pacific benchmarks, trailing Thailand and the Philippines, but ahead of Vietnam and Korea. – Malaysia’s major indices showed mixed performance, with FBMS, FBMHS, and FBMEMAS outperforming the FBMKLCI.

Portfolio Flows: Bonds and Equities

– Monthly bond flows remained volatile, with sharp swings between inflows and outflows. – Combined portfolio flows (equities and bonds) reflected similar volatility, with net outflows in recent months.

Foreign Shareholding Trends: Historical Perspective

– Foreign shareholding in Malaysian equities has been steadily declining since its peak in 2013. – Current foreign shareholding of 18.8% as of August 2025 is below historical averages.

Summary: Outlook and Key Takeaways for Investors

– Malaysia continues to face high foreign net selling, particularly in financials and select large caps. – Tech and construction sectors offer relative strength, while gloves/healthcare and selected banks are seeing persistent foreign outflows. – Regional macro factors, tariffs, and geopolitical events remain key risks and drivers for fund flows. – Investors should monitor sector rotation, foreign shareholdings, and macro developments for tactical positioning.

Disclaimer

All data, analysis, and observations contained herein are for informational purposes only and do not constitute investment advice. Investors are encouraged to seek professional guidance before making any financial decisions.