Markets take a cautious stance following election results in the first hung parliament in the Southeast Asian country’s history.
Malaysia’s stock market and currency tumbled after a national election produced the Southeast Asian nation’s first majorityless parliament, sparking a scramble to form a coalition ahead of a Monday afternoon deadline. .
The ringgit fell nearly 0.8 percent against the US dollar in early trading on Monday, as markets weighed the possibility of a prolonged period of political instability.
The benchmark Bursa Malaysia index fell more than 1 percent.
“Parliament was largely expected to be divided, but it is still seen as a negative in the short term as it means they will once again have to cobble together a coalition to govern,” said Trinh Nguyen, senior Asia economist at Natixis in Hong Kong. . Al Jazeera.
“In other words, politics takes precedence, and it is not yet clear who will win and to what extent they will be able to push the mandates. Key issues such as fiscal consolidation will be challenging as there is a political impasse. We expect investors to hold off investing until there is more certainty regarding policy and policy direction.”
Malaysia’s national elections on Saturday produced no clear winner, with neither the Pakatan Harapan (PH) nor Perikatan Nasional (PN) coalitions securing the 112 seats needed to form a government.
PH, led by opposition Anwar Ibrahim, won 82 seats, while PN, led by former Prime Minister Muhyiddin Yassin, won 73 seats.
Both Anwar Ibrahim and Muhyiddin have claimed to have enough support among lawmakers to form a new government.
King Sultan Abdullah Sultan Ahmad Shah of Malaysia has given politicians a deadline of 2:00 p.m. local time on Monday to notify the palace of their preferred government.
Malaysia, an ethnically diverse nation made up of a majority Malay along with significant ethnic Chinese and Indian communities, has been plagued by political instability since PH won a historic victory in the 2018 election, ending the 60-year rule of the Barisan National. coalition.
PH collapsed amid political infighting in February 2020, resulting in Muhyiddin’s appointment as prime minister. Muhyiddin himself was ousted just over a year later and replaced by BN’s Ismail Sabri.
Southeast Asia’s fourth-largest economy has rebounded strongly from the COVID-19 pandemic after suffering its biggest contraction since the 1998 Asian financial crisis.
The gross domestic product (GDP) increased 14.2 percent during the July-September period, after growing 8.9 percent during the second quarter.