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Market Update 21/11/22 - Malaysia GE15.
Latest update: November 24, 2022, 2:35 PM.
On the morning of Saturday, November 19, 2022 Malaysia starts their day with a solute one determination – to vote for their future. The voting period starts from 8 am til 6 pm, yet Malaysians had seen queuing up as early as 7 am.
Malaysians cast their ballots Saturday in a weather turmoil of watershed election. Nearly 1000 candidates battling for 222 parliamentary seats. The day ended with PH (Pakatan Harapan) and its allies winning with 82 seats, the most number of seats in GE15, but are still short of the 112 magic number needed to form the simple majority in Parliament. PN (Perikatan Nasional) was close behind after winning a total of 73 seats, including 22 seats contested under the PAS logo. While BN (Barisan Nasional) trailed behind its rivals with only 30 seats.
Malaysia woke up on Sunday, November 20, 2022 with un- clear election decision. A hung parliament wherein neither coalition crossed the indispensable line of 112 simple majorities to form the next government independently.
Both PH and PN head start with 9 seat gap; the new government can be formed without a majority of winning seats, a mixed government of several political parties, and a new coalition emerges. Malaysia’s King granted both party leaders another 24 hours to decide on their choice of alliance and prime minister, days after the national vote produced a hung parliament.
The Borneo states of Sabah and Sarawak appeared as the kingmakers in the formation of a new government in the GE15 after GPS swiping 23 seats. No single coalition was able to come up with a clear winner following the elections, which means each coalition will have to look towards Sabah and Sarawak for support. The Borneo states collectively hold 25% of the total seats; 56 out of 222 parliamentary seats.
Both leaders DS Anwar Ibrahim and DS Muhyiddin Yassin claimed they have enough support to become Malaysia’s 10th PM. Yet, on Monday, November 21,2022, Malaysian are still left in the dark as The King extends a new deadline for party leaders to name their alliance and PM for another day. Both parties will have until 2 pm on Tuesday, November 22 2022 to present plans to the King.
“The king has called upon the people to be patient and be calm until the new government formation and naming of the 10th Prime Minister is completed,” the statement from the Palace reads.
Update: (as of November 24,2022.)
After two decades as opposition leader, Dato’ Seri Anwar Ibrahim is finally named Malaysia’s 10th Prime Minister. After days of negotiations, and political uncertainty, the Yang di-Pertuan Agong finally decided to appoint Malaysia’s latest prime minister after meeting with the Conference of Rulers. The Malay rulers also support the King’s stand on the formation of a stable government as soon as possible following the general election
“His Majesty stressed that the nation is a treasure that the various leaders are entrusted with. This treasure must be looked after because it will be passed on to the next generation,” the palace said in a statement.
The swearing-in ceremony will took place on the same day, November 24, 2022 at 5:00PM.
The hung parliament and what it meant for the economy?
The hung Parliament will aggravate the economy and financial uncertainty of a country. It will further take a toll on the economy. Malaysia’s stock market and currency dipped follows shortly after. The hung parliament was largely expected but is still viewed as negative in the short term, as they will probably have to cobble a coalition once again to rule. There will be future difficulties in addressing fiscal consolidation as there is a political deadlock.
The local economy and corporate earnings are likely to take a hit, leading to deteriorating foreign investors’ confidence and a sharp foreign fund outflow. Foreign investors will want to see more clarification/ clarity, so it is expected to see many major decisions on investing in Malaysia to be postponed until the dust is settled.
The economy and finances will be difficult in 2023, along with the upcoming recession. Whether we are ready or not, the next government must be prepared to make difficult decisions in the interest of the economy. The main common interest should always be highlighted in policies, people, and the economy. Regardless of the outcome, fiscal consolidation will remain a priority, although the path could be different depending on which party or alliance leads the government.
The Ringgit Malaysia
The Ringgit might have a very low correlation with political considerations as it is not one of the currencies that makes up the forex market. Still, the ringgit dropped to almost 0.8% against the US dollar to RM/$ 4.5837 in early trading on Monday following the election results before recovering to be down 0.1 percent. Resulting in the Malaysian Ringgit dropping and being the worst Asia currency performer on Monday.
KLCI response
On Thursday, Bursa’s benchmark FBM KLCI closed off the day low as investors start to keep low and wait for the general election. The index closed 0.06% or 0.94 points higher to 1,449.32.
This week, The KLCI is likely to see cautious trading. Stay true to the line, Bursa Malaysia ends the Monday, November 21 morning session flat amid cautious sentiment. KLCI greeted with1,434.55 opening. After several major news of the possible coalition spurring the internet, KLCI sees a light increase after hitting a low at 1,427 at 9.21 am. The day continues to see stagnant movement rounding around 1,435 marks. The market is still showing signs of caution as the market close at 1,447.96.
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Today, November 22, 2022, The market is open at 1,434.55 and the market continues to be positive as at (9.30 am) it seems slightly higher with a 0.09% increase to 1,449.30.
Nevertheless, it is believed that the current impasse won’t be long drawn. Investors would probably adopt a wait-and-see attitude until a new government is formed. However, if the condition pursues, KLCI might seem to further continue to test the 1,400 level.
Update: (as of November 24, 2022.)
Bursa Malaysia open on Thursday, November 24, 2022 with 7.18 points higher at 1,450.68 and ended the morning session on a steady note, with the key index rising by 2.01% on continuous buying momentum amid improved market sentiment on both the local and external fronts.
FTSE Bursa Malaysia KLCI (FBM KLCI) later continue to climb with 28.94 points to 1,471.44 from 1,443.5 yesterday.
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