PETALING JAYA: Malaysia’s capital market attracted RM7.7 billion in August from foreign investors — the highest monthly inflow since June last year.

This was enough to offset the net outflows in June and July, finance minister Tengku Zafrul Aziz said in a statement.

He said this was a sign that investor confidence in the local capital market had been restored.

On the equity market front, he said last month was the first time since June 2019 that a net positive growth had been recorded in foreign purchases, indicating a reduction in the outflow of overseas funds.

“Malaysia’s local benchmark index, the FBMKLCI, which fell as much as 5.7% year-to-date, managed to recover 50% of its losses over the last fortnight.

“This is testament to the confidence of investors and fund managers in the nation’s economic growth prospects, as well as continuity of policies.

“Attractive valuations relative to other markets within the region have also been a major draw for foreign fund inflows.”

Overall, he said the outlook for the third quarter remained challenging due to the prolonged lockdowns in states like Selangor, which are major economic contributors.

However, the reopening of sectors as part of the national recovery plan and easing of restrictions for the fully vaccinated are expected to mitigate some of the damage.

Additionally, the reopening of more sectors in the last quarter of the year is expected to help Malaysia reach its projected 3-4% GDP growth.

“Moving forward, the upcoming tabling of the 12th Malaysia Plan at the end of September and the 2022 budget at the end of October will provide more clarity on policy directions.

“These will pave the way for further socio-economic recovery, growth and reforms in the short, medium and longer term.” – FMT