Malaysia stocks perform well after polls

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Bursa Malaysia index
The Bursa Malaysia FBMKLCI jumped significantly after elections

Malaysian stocks continued to show a positive path after the May 5 elections in the past two weeks. Stocks rose strongly on fresh investor confidence since the new government was elected.

After the post-elections opening record on May 6 when the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI) opened 4.5 per cent higher at 1771.62 and reached a 1826.22 record during the day, the sentiment continued. The index ended Friday May 17’s trading at 1,769.16, climbing another 2.44 points, or 0.14 per cent, marking its best week since July 2009.

Year-to-date, the index climbed 6.09 per cent, and 19.67 per cent over one year.

May 17’s gains were due to blue chips and stocks of government-related companies, such as Hong Leong and Petronas-related counters. Hong Leong Bank rose 26 sen to RM14.30, Hong Leong Financial Group gained 16 sen to RM15.56, while Petronas Dagangan jumped 32 sen to RM25.12 and Petronas Gas climbed 14 sen to RM22.04.

The increasing confidence in the Malaysian markets stems from the victory, even with a short majority, of the National Front ruling coalition headed by Prime Minister Najib Razak and his commitment to move forward with the implementation of the $44 billion Economic Transformation Plan aimed to turn Malaysia into an high-income economy by 2020.

However, credit-ratings agencies have voiced concerns about Malaysia’s general fiscal health, as the country’s balance shows high debt and massive subsides undermining the government’s economic aims. Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch Ratings, said that “Fitch will look forward to greater clarity on the government’s fiscal and economic policy programme following the May 5 elections”, pointing out the dangerous government dependency on revenues coming from the oil sector.

In this context, Nazri Khan, Affin Investment Bank’s Vice-President, said that “the weakness in the top five stocks on Bursa Malaysia, namely Maybank, CIMB, Axiata, Sime Darby and Petronas Chemicals, would suggest more downside potential for the index in the following weeks”.  But, “the strength in global bourses should provide cushion to the local weakness and the new government programmes will boost the positive trend,” he added.

Andy Ong, head of research at Affin Investment Bank, showed more confidence in the future stock performance at the Bursa Malaysia as investor concerns about political risks are diminishing. “With the election now over, the risk premium will diminish and the positive tendency will continue, but mixed performance could appear during next week now that the election euphoria will definitely wane,” Ong said.

On the positive side, healthy foreign reserves, local liquidity and local banks’ wide capital base as well as moderating inflation and the central bank’s accommodative monetary policy will continue to be the main ingredients that will keep investors’ attention to Malaysian stocks in the weeks ahead, the analysts said.

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Reading Time: 2 minutes

The Bursa Malaysia FBMKLCI jumped significantly after elections

Malaysian stocks continued to show a positive path after the May 5 elections in the past two weeks. Stocks rose strongly on fresh investor confidence since the new government was elected.

Reading Time: 2 minutes

Bursa Malaysia index
The Bursa Malaysia FBMKLCI jumped significantly after elections

Malaysian stocks continued to show a positive path after the May 5 elections in the past two weeks. Stocks rose strongly on fresh investor confidence since the new government was elected.

After the post-elections opening record on May 6 when the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI) opened 4.5 per cent higher at 1771.62 and reached a 1826.22 record during the day, the sentiment continued. The index ended Friday May 17’s trading at 1,769.16, climbing another 2.44 points, or 0.14 per cent, marking its best week since July 2009.

Year-to-date, the index climbed 6.09 per cent, and 19.67 per cent over one year.

May 17’s gains were due to blue chips and stocks of government-related companies, such as Hong Leong and Petronas-related counters. Hong Leong Bank rose 26 sen to RM14.30, Hong Leong Financial Group gained 16 sen to RM15.56, while Petronas Dagangan jumped 32 sen to RM25.12 and Petronas Gas climbed 14 sen to RM22.04.

The increasing confidence in the Malaysian markets stems from the victory, even with a short majority, of the National Front ruling coalition headed by Prime Minister Najib Razak and his commitment to move forward with the implementation of the $44 billion Economic Transformation Plan aimed to turn Malaysia into an high-income economy by 2020.

However, credit-ratings agencies have voiced concerns about Malaysia’s general fiscal health, as the country’s balance shows high debt and massive subsides undermining the government’s economic aims. Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch Ratings, said that “Fitch will look forward to greater clarity on the government’s fiscal and economic policy programme following the May 5 elections”, pointing out the dangerous government dependency on revenues coming from the oil sector.

In this context, Nazri Khan, Affin Investment Bank’s Vice-President, said that “the weakness in the top five stocks on Bursa Malaysia, namely Maybank, CIMB, Axiata, Sime Darby and Petronas Chemicals, would suggest more downside potential for the index in the following weeks”.  But, “the strength in global bourses should provide cushion to the local weakness and the new government programmes will boost the positive trend,” he added.

Andy Ong, head of research at Affin Investment Bank, showed more confidence in the future stock performance at the Bursa Malaysia as investor concerns about political risks are diminishing. “With the election now over, the risk premium will diminish and the positive tendency will continue, but mixed performance could appear during next week now that the election euphoria will definitely wane,” Ong said.

On the positive side, healthy foreign reserves, local liquidity and local banks’ wide capital base as well as moderating inflation and the central bank’s accommodative monetary policy will continue to be the main ingredients that will keep investors’ attention to Malaysian stocks in the weeks ahead, the analysts said.

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