How did the Budget 2021 approval anxiety affect foreign investment?

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Anxiety Over Budget 2021 Approval Led to Foreign Equity Sell-Off

Anxiety surrounding the parliamentary approval of Malaysia's national Budget 2021 led offshore investors to sell RM106.0 million net of local equities on Tuesday. This marked a shift in sentiment from the preceding days, which had seen net inflows into the local stock market.
Foreign Investors Shifted to Net Selling

Following a week where foreign selling had narrowed to RM86.6 million, international investors began the week with net purchases of RM169.5 million on Monday, influenced by positive speculation surrounding imminent Covid-19 vaccine availability. However, this trend reversed on Tuesday as RM106.0 million net of local equities were sold by offshore investors. This sell-off occurred as concerns mounted ahead of the parliamentary session to approve the national Budget 2021.
Budget 2021 Approval Process Creates Uncertainty

The parliamentary sitting to approve Budget 2021 was a focal point of concern for foreign investors. While the specific provisions of the budget that may have caused anxiety are not detailed, the process of approval itself introduced a degree of uncertainty into the market. Generally, significant fiscal events like budget approvals can influence investor confidence as they signal the government's economic priorities and fiscal stance for the upcoming period.
Broader Market Sentiment Fluctuated

Despite the Tuesday sell-off linked to budget anxiety, foreign fund flows into Bursa Malaysia showed some recovery later in the week. On Wednesday, RM25.1 million net of local equities were bought by foreign funds, as sentiment was bolstered by the US President's decision to cooperate with the transition of power. However, further withdrawals of RM17.2 million net occurred on Thursday, and the momentum of foreign net selling accelerated to RM158.1 million on Friday, driven by profit-taking activities.

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How did the Budget 2021 approval anxiety affect foreign investment?

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