Malaysian Prime Minister Anwar Ibrahim’s coalition retained half of the six states in the provincial elections, which promises policy continuity and bode well for the improving sentiment on the nation’s risk assets.
(Bloomberg) — Malaysian Prime Minister Anwar Ibrahim’s coalition retained half of the six states in the provincial elections, which promises policy continuity and bode well for the improving sentiment on the nation’s risk assets.
Anwar and his allies retained Selangor, Malaysia’s most industrialized state, as well as top exporter Penang, and Negeri Sembilan on the Southwest coast. The pro-Malay Perikatan Nasional bloc led by former premier Muhyiddin Yassin won most if not all of the seats in the Malay-majority states of Kedah, Kelantan and Terengganu.
The results came in-line with expectations, which allows Anwar additional time to consolidate his power before the next Federal elections. They also reduce the likelihood of allies immediately reassessing support for him.
The appetite for Malaysian assets had already begun to improve weeks before the polls. Global investors ramped up purchases of Malaysian stocks and bonds this quarter in their quest for carry returns amid bets that global central banks are nearing the conclusion of their tightening cycles.
Here’s a selection of comments from market participants on implications from the election results:
Danny Wong, chief executive officer of Areca Capital Sdn.
“It removes the overhang issue and bodes well for a more stable political situation in Malaysia, where this could be one of the catalysts for better sentiment and foreign flow.”
Some investors were sitting on the sidelines and now they will be less likely to hold back their investments.
Nirgunan Tiruchelvam, an analyst at Aletheia Capital Ltd.
“Anwar’s party’s showing at the state level suggest there is a strong body of support for his coalition across the country and he can consolidate power in the run up to the federal elections.”
The results are positive for the stock market, and businesses dependent on government contracts such as infrastructure and construction should do particularly well.
NOTE: Some of Malaysia’s biggest construction companies include Gamuda Bhd., Sunway Bhd. and its subsidiary Sunway Construction Group Bhd.
Tan Teng Boo, chief executive officer and managing director of Capital Dynamics Sdn.
There is now hope for Anwar’s government if it can effectively deal with some problems with UNMO.
The impact on markets will be only muted.
TA Research
“Significant inroads made by Perikatan Nasional in all three states won by the unity government were beyond expectations and could be a sentiment dampener for local equities due to growing popularity of fundamentalism.”
“We are inclined to maintain our end-2022 FBMKLCI target of 1,515 and propagate buy-on-weakness undervalued blue chips, defensive plays in the consumer, utilities, healthcare and construction.”
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