This Is What Mahathir’s Return Just Did to Malaysian Stocks

There’s one word to describe Malaysia’s stock market as it reopened Monday after a three-day break that saw the opposition party win office for the first time in six decades: Volatile.

The nation’s benchmark FTSE Bursa Malaysia KLCI Index plunged as much as 2.3 percent Monday and swung between gains and losses in the first hour of trading. The market was shut for three days last week as Mahathir Mohamad led an alliance to unexpectedly beat the ruling Barisan Nasional coalition. In his first remarks as prime minister of Malaysia, Mahathir said he’d lead a business-friendly administration and find ways to boost the nation’s equity market.

Gamuda Bhd., the nation’s largest construction company, fell as much as 19 percent — the most since October 2008 — after the new government said it will review the projects by the previous administration. Nestle (Malaysia) Bhd., a unit of Nestle SA, added 5.2 percent after Mahathir’s coalition pledged to abolish the nation’s current goods and services tax, along with fuel subsidies and minimum wage realignment.

Market watchers had expected equities to fall across the board, with government-linked companies, benchmark index stocks and infrastructure companies taking the brunt of a potential selloff. iShares MSCI Malaysia ETF, the biggest exchange-traded fund holding Malaysian stocks, fell 6.2 percent last week. The FTSE Bursa Malaysia KLCI Index has corrected by 3.3 percent after it reached a record on April 19.

Affin Hwang Asset Management Bhd. expected a decline of as much as 8 percent in the first few days of trading post-election, while CGS-CIMB Securities lowered its end-2018 target for the benchmark index. UOB Kay Hian Holdings Ltd. and Nomura Holdings Inc. are reviewingtheir views on the main measure and equities. On the flip side, Malayan Banking Bhd. has expressed optimism for financial markets following the election.

Consumer Consumption

Mahathir’s campaign pledge to nullify the nation’s current goods and services tax, fuel subsidies and minimum wage realignment could benefit the consumer sector, according to Gan Eng Peng, director of equities strategy and advisory at Affin Hwang Asset Management.

Dutch Lady Milk Industries Bhd., Fraser & Neave Holdings Bhd., Heineken Malaysia Bhd., Carlsberg Brewery Malaysia Bhd., Padini Holdings Bhd. all gained

Export Oriented

The ringgit fell today to a four-month of 3.9865 per dollar. Export-driven companies with products from rubber gloves to technology climbed.

Inari Amertron Bhd. gained as much as 8.2 percent; Vitrox Corp. Bhd. rose 11 percent; Unisem (M) Bhd. added 11 percent; Malaysian Pacific Industries Bhd. rose 8 percent; Globetronics Technology Bhd. gained 11 percent; Top Glove Bhd. rose 5.9 percent; Hartalega Holdings Bhd. advanced 5.6 percent.

Flying Under The Radar

AirAsia Group Bhd. founder Tony Fernandes’s open support for former Prime Minister Najib Razak’s Barisan Nasional coalition could impact the company’s shares, according to Vincent Khoo, an analyst at UOB Kay Hian. In a Facebook post on Sunday, Fernandes apologized for his actions, adding that he “buckled” under pressure. AirAsia shares fell as much as 13 percent, before narrowing losses to 5.1 percent in recent trading.

Courtesy : Bloomberg
Photo : CNN Indonesia

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