M’sia: Most of the time this works

In Malaysia on 25/05/2013 at 5:34 pm

No, not fixing elections, arresting opposition leaders for sedition, or that corruption pays (DAP has been calling for clean govt since 1981 (can wait five more yrs? Or longer? No wonder DAP says it accepts election results).

It’s the state funds buying when foreigners sell, and sell when the foreigners want in.

Malaysia’s biggest pension fund sold about 331 million ringgit ($137 million) of shares in the country’s benchmark index as Prime Minister Najib Razak’s election victory sparked the largest rally since 2008.

Employees Provident Fund, which oversees US$176 billion for more than 13 million Malaysians, reduced stakes in 20 of the 30 stocks in the FTSE Bursa Malaysia KLCI Index as the gauge jumped 3.4 percent on May 6, regulatory filings compiled by Bloomberg show. The fund’s net sales of UEM Land Holdings Bhd were the biggest on record for a single day, while the reduction in Public Bank Bhd was the largest in three months.

Only sometimes does it go wrong. In 1993, America discovered M’sia. US funds kept buying, and local funds sold. But the buying didn’t stop and local funds had to come into the market to buy stock at higher prices at year-end to remain within govt rules. Ended in tears in early 1994 for everyone when the Fed raised rates and foreigners wanted out, and the locals had to buy juz to average down.


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