Malaysia election result likely to keep financial markets volatile for a while
Analysts say the new administration needs to clarify its economic policies
Analysts had the following views on how markets may react in the wake of Mahathir Mohamad’s shock victory in Malaysia’s general election victory. The 92-year-old statesman, who ran the country from 1981 to 2003, defeated his former protégé Najib Razak, ending 60 years of rule by the Barisan Nasional coalition.
While the news is excellent for democracy, market uncertainty is likely to linger as the new four-party ruling coalition has hardly any solid economic policy agenda besides scrapping the unpopular goods and services tax system
Anthony Chan, managing director, chief investment strategist, Asia, Union Bancaire Privée.
The bottom line is that while a long-term fix of governance, institutions and public life is now in sight, near-term policy uncertainty will be high. That will take a toll on the ringgit at least until more clarity emerges
Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management
Short-term, we may see market volatility given uncertainty around policy implementation. However, we may see some opportunities should policies move in the right direction
Teera Chanpongsang, portfolio manager at Fidelity International
Short-term, expect uncertainty to linger with the key player being deputy PM Anwar, his ability to keep the government together and deliver on the election agenda. Hence, market movements [are] likely to be unpredictable. Longer term, the outcome is positive as Malaysia starts off on a renewed state, however getting the economy back on track is critical. Sector-wise, I am positive for exporters in the short term and negative for construction names
Madeleine Kuang, portfolio manager at Fidelity International
After the initial knee-jerk reaction of all fixed income asset classes, credit will likely be anchored by rating agency expectations. Inflation dynamics in the near term support lower rates for longer, so we would look into buying back our short local rates positions
Bryan Collins, head of Asian fixed income at Fidelity International