Election uncertainty could keep investors cautious
KUALA LUMPUR: Malaysia's evolving political landscape could keep investors cautious in the near term as uncertainty over upcoming state and federal elections adds to existing pressures on the stock market, Hong Leong Investment Bank Bhd (HLIB) said.
Malaysia's political landscape is in flux, and this uncertainty could deter investors for the foreseeable future, according to Hong Leong Investment Bank Bhd (HLIB). Despite the Democratic Action Party's decisive win in federal elections, HLIB warns that political risks remain high due to upcoming state elections and potential shifts in the governing coalition.
The bank cites Barisan Nasional's victory in Johor and strong performances by BN and Perikatan Nasional (PN) in Negri Sembilan as indicators of a changing political environment. The looming general election in 2027, coupled with the impending terms of Melaka and Sarawak, could further cloud investor sentiment. HLIB notes that the political situation is compounded by external pressures, including heightened Middle East tensions, a busy corporate earnings season, and continued foreign fund withdrawals.
As a result, the FTSE Bursa Malaysia KLCI is expected to trade within a narrow range, with heightened caution due to the prevailing uncertainties. Foreign investors have been net sellers for the past 11 trading sessions, with a total outflow of RM761 million in the last five days and RM1.25 billion month-to-date. Local institutions, however, have been buying shares, while retail investors have been net purchasers.
The benchmark index has recently consolidated after gaining 95 points from its year-to-date low of 1,655 on June 29 to 1,750 on August 6. A break below 1,720 could signal further downside risk towards 1,700, while a sustained rise above 1,730 and 1,750 could reignite upward momentum.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
