SGX stocks with Malaysia exposure dip following shock election result

SGX stocks with Malaysia exposure dip following shock election result

Malaysia's export-reliant economy beat forecasts in January-March thanks to a pick-up in oil
File photo of Kuala Lumpur's skyline. (Photo: AFP/Mohd Rasfan)

SINGAPORE: A number of stocks on the Singapore bourse with exposure across the Causeway fell as investors felt the jitters after a largely unexpected election result in Malaysia which saw the Barisan Nasional toppled after 61 years in power.

Jardine Cycle & Carriage dipped at the Singapore Exchange's open to S$32.78. As at 11am, it was down by about 2.7 per cent to S$32.96, IHH Healthcare fell close to 2 per cent to fall below S$2 and Top Glove Corporation fell 2.4 per cent to S$3.20. Hatten Land also fell but by a small percentage of 0.62 per cent, to S$0.16.

Malaysia's stock exchange is closed Thursday and Friday as two public holidays were declared following the election, but Asian market investors are facing uncertainty after the electoral upset.

Moody's ratings agency said Malaysia is now in uncharted territory after an alliance of opposition parties led by former prime minister Mahathir Mohamad took 113 seats to win a parliamentary majority.

"Little is known about the opposition’s full range of economic policies, and its electoral pledges have lacked details that would allow for a full assessment of their budgetary and macroeconomic impact," said Anushka Shah, vice-president and senior analyst, of Moody's sovereign risk group.

The ringgit slid more than 2 per cent in the non-deliverable forward market and the cost to insure against a Malaysian debt default rose.

It rose against the Singapore dollar and was trading at 2.94 ringgit to S$1 as at noon.

However, some experts believe that the jolt to the stock and foreign exchange markets will be temporary.

Said Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management: "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.”

Ramlan Pointon Consultants Economic Analyst Dr Jorah Ramlan pointed out that several downturns in the economy are not due to internal matters but rather, external.

“Whoever is the government of the day, I can say that the economy has been progressing and will continue to grow.

“They must understand. The fundamentals and factors for economic development should not be changed for popularity. Thus, I don't think the economy will decline,” she told Bernama.

Hermana Capital CEO and chief investment officer Dr Nazri Khan Adam Khan said in the near-term, there would be a major reaction in the equity and forex markets, as they may fear if current policies in place will continue.

He, however, expects the market to stabilise in two to three months after the new government takes over Putrajaya.

"There will be a shift in rotation from sector-to-sector, from BN-linked sectors, which are  mostly in hard infrastructure, construction and property, to soft-infrastructure sectors which are being championed by Pakatan,” he added.

Meanwhile, HSBC Global Research, in a recent note, said PH’s proposal to abolish the Goods and Services Tax and to reintroduce some fuel subsidies for selected consumer groups within the first 100 days in office, posed a significant fiscal risk, in the absence of off-setting revenues.

Source: CNA/Bernama/hm