Foreign investor participation in Malaysia’s stock market has dropped to a historic low of 18.1% as of August, prompting calls for the government to take decisive action to restore confidence and stem ongoing capital outflows. Datuk Seri Dr Wee Ka Siong, president of the Malaysian Chinese Association (MCA), highlighted concerns over the steady decline in foreign investment since the 2018 general election.
Dr Wee noted that the trend has worsened recently, with about RM800 million leaving the Malaysian equity market in the first two weeks of September alone. He cited data showing approximately RM84.5 billion in foreign funds has exited Malaysia since May 2018. Annual net outflows remain significant, with RM2.3 billion withdrawn in 2023, RM4.2 billion in 2024, and a notable RM22.5 billion last year. Through the first part of 2026, net foreign outflows had already reached RM5.3 billion as of September 11. During the four years under the current Madani administration, Malaysia has witnessed RM34.3 billion in net foreign capital outflows.
Dr Wee expressed concern that the heavy reliance on domestic institutions and government-linked investment funds to prop up the local market is unsustainable. While local investment can provide liquidity and mitigate some selling pressure, it cannot fully compensate for the absence of foreign capital, which plays a key role in fostering a vibrant, deep, and liquid equity market.
According to Dr Wee, restoring foreign investor trust involves more than simply attracting fresh funds. Sustained foreign participation signals global confidence in Malaysia’s economic outlook, policy stability, and capital market maturity. The drop in foreign shareholding comes after a period when Malaysia was considered one of Southeast Asia’s more established markets, previously experiencing one of the region’s longest bull runs before reaching current lows.
Dr Wee urged the government to move beyond reliance on domestic support and articulate a clear, strategic plan to reverse the downward trend. He emphasized the need for policymakers to provide concrete measures addressing the fundamental challenges behind foreign investors’ decreased appetite for Malaysian equities. Despite ongoing efforts to position Malaysia as an attractive investment destination, foreign participation continues to decline, underscoring the urgency for more decisive government intervention.