Ringgit, shares fall amid uncertainty over Malaysia's hung Parliament election result - The Straits Times

KUALA LUMPUR - Malaysia saw its first-ever hung Parliament in Saturday’s elections after none of the three major coalitions won enough seats to form a majority, extending the political crisis in an economy on a fragile rebound.

While uncertainty remains, investors are expected to take the results in their stride as most have factored in a hung Parliament as a “default position”, according to analysts.

Still, the ringgit dropped 0.6 per cent against the US dollar to 4.5837 following the election results, with the Malaysian currency the worst performer in Asia on Monday.

Against the Singapore dollar, the ringgit weakened 0.45 per cent to 3.332, making for a year-to-date drop of 7.3 per cent.

Malaysia 10-year yields were steady at 4.32 per cent, but the nation’s share benchmark dropped as much as 1.5 per cent.

Most of Malaysia’s gaming and alcohol-related stocks fell following Parti Islam SeMalaysia’s (PAS) advance in the elections.

Malaysian party leaders have until Monday afternoon to inform the nation’s monarch of their choice for prime minister and the alliances they have formed.

Veteran opposition leader Anwar Ibrahim’s reformist coalition won 82 parliamentary seats in the elections, the biggest haul among the competing blocs. Meanwhile, former prime minister Muhyiddin Yassin said he has enough support to make a bid for the premiership.

Here is what analysts and money managers have to say:

Mr Megat Fais, head of Malaysia equity research at Citi

“A lack of strong majority government remains less than ideal from a policy-making standpoint, especially with concerns over Malaysia’s fiscal position.”

A Yassin-led coalition government can put more scrutiny on gaming, brewery and tobacco shares while ‘apolitical’ sectors such as planters and glovemakers could be seen as places to hide. Investors could remain wary of construction-related stocks, given the sector’s dependence on policy implementation.

“In the event of a sell-off by foreign investors, banks such as Public Bank could be negatively impacted given the strong foreign inflows year to date.”

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2022-11-21 01:54:02Z
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