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Monday, May 14, 2018

How The Market Will Be After Election?

A historic win at Malaysia's general election by the opposition alliance, Pakatan Harapan, unexpectedly beat the 60 years of ruling Barisan Nasional coalition. While the news is excellent for democracy, market uncertainty is likely to linger. Thankfully most are positive that the volatility will be temporary. 


***Update***
Prime Minister Tun Dr Mahathir Mohamad swiftly named a senior cabinet portfolios and a “council of elders”is likely to soothe investor sentiment within a brief period.

Council of Elders:
1. Daim Zainuddin
2. Zeti Aziz
3. Hassan Merican
4. Robert Kuok
5. Jomo Kwame Sundaram

***********



Related Quotes:

Amy Yuan Zhuang, Research Analyst at Nordea Markets
The unexpected election result is MYR negative in the near term, but once political uncertainties fade away, the MYR will likely strengthen against the USD, supported by expected USD weakness, high oil prices and solid macro conditions.


Aninda Mitra, Senior Sovereign Analyst at BNY Mellon Investment Management
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.


Teera Chanpongsang, portfolio manager at Fidelity International
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. 


Gan Eng Peng, Director of Equities Strategy and Advisory at Affin Hwang Asset Management
While we acknowledge the possibility of short-term capital outflows because of policy uncertainties, we firmly believe the newly-formed government presents an opportunity, as it is comprised of a group of senior ministers with strong credibility.


Datuk Shahril Ridza Ridzuan, CEO at Employee Provident Fund
Short term volatility is natural given this is the nation’s first experience of a power transition, but the smooth process seen so far will assure investors that Malaysia is a mature democracy and economy. The new government’s call for greater enhancements to local institutions’ corporate governance practices and independence, together with greater scrutiny by strong regulators, such as Bank Negara Malaysia and the Securities Commission Malaysia, would bode well for the local business environment.


Anushka Shah, Sovereign Risk Group Assistant Vice-President at Moody’s 
The Government’s debt burden is relatively higher than other A-rated sovereign states and this will likely remain a challenge for the country’s credit profile. 


Anthony Dass, Chief Economist at AmBank Group Research
Removing the GST and introducing the SST and other subsidies will act positively on the economy, as they help to improve the disposable income of households, and thus, spending. This will help buffer any shortfalls from the GST. Besides prudent financial management as we have seen in Selangor and Penang, a more transparent public procurement system or tendering process will improve competition and lower margins for players and ease budget strains. Dr Mahathir’s strong track record, added with Datuk Seri Anwar Ibrahim as the prime minister-in-waiting and the maturity of Malaysians as reflected in this GE, augur well for the country. These are positive signs on the business and consumer confidence.


Simon Chen, Investors Service Financial Institutions Group Vice-President at Moody’s 
We are closely following the developments around some campaign promises that could have a negative impact on market sentiment and trigger volatility in the financial markets. These dynamics will take time to unfold and a lot will depend on what the new Government unveils in the coming weeks and months.


Tan Sri Muhammad Ibrahim, Governor at Bank Negara Malaysia
Malaysia was no stranger to short-term volatility, as the country's open economy was highly integrated with global markets. Industry players should not to overreact to market noises, especially when it was caused by factors which were temporary in nature.


Tan Sri Azman Mokhtar, Managing Director at Khazanah Nasional Bhd 
On managing investors’ perception during the transition of power, he said there could be the usual gyration in the market in the short-term, but the current environment provided a fantastic opportunity in the medium-to-long term. So, from the market, ringgit standpoint, I think clearly the confidence is actually the biggest factor. I think with the new reset, this will come through. 

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