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Investors `comfortably numb' as Malaysia stocks brace for polls
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Malaysia's Prime Minister Najib Razak delivers his speech during a rally against US President Donald Trump's recognition of Jerusalem as Israel's capital, in Putrajaya, outside Kuala Lumpur on December 22, 2017.
(AFP/Mohd. Rasfan)
A
s Malaysian Prime Minister Najib Razak kicks off the election process looking to extend the ruling coalition’s 60 years of unbroken hold on power, Geoffrey Ng is looking to Pink Floyd to sum up investors’ mood.
“Have you heard of the song ‘Comfortably Numb’ by Pink Floyd?” Ng, a director of Fortress Capital Asset Management Sdn., said in a phone interview in Kuala Lumpur. “That’s how we would describe the period right now for the Malaysian market.”
Najib said Friday parliament will be dissolved on Saturday. The election must be held within 60 days after dissolution of the legislature. Malaysia’s stock gauge, home to the world’s longest bull market run, slid 0.1 percent at the midday break in Kuala Lumpur. The gauge is up more than 2 percent this year, with its 50-day historical price volatility elevated at a two-year high.
Investors will be on the sidelines from now till the elections, Ng said. Phillip Capital Management Sdn. sees any result being met with muted reaction as concerns focus more on trade tensions between the U.S. and China that’s kept Asian equities on edge.
Alan Richardson of Samsung Asset Management Ltd. said with risk aversion having risen since March from the trade spat, there is little tolerance for political risk in Malaysia.
“Every polls will have some uncertainty and investors will have to take it in their stride,” Ng said. “Market reaction is always dependent on the quantum of a win on either side. Market expectations are for the ruling coalition to continue.”
The FTSE Bursa Malaysia KLCI Index is up 120 percent from its October 2008 low in the longest bull market among nations in the MSCI All-Country World Index.
“The strategy to outperform the market would still be a bottom-up approach to invest in stocks selectively, said Ang Kok Heng, chief investment officer at Phillip Capital. “I don’t think there would be any impact, people are more concerned about trade war than elections.”
