Malaysia's markets showed few signs of investor panic as trading reopened after Mahathir Mohamad came to power in a surprising election result.
Equities and the Ringgit recovered from an early slump to climb higher than fears over an untried one The government was reassured by the appointment of seasoned advisers, including a former central banker and finance minister. Bonds posted losses.
"We have become slightly positive in the short term," said Danny Wong, CEO of Areca Capital Sdn. "Most local funds have been slightly positive with more clarity from Mahathir," he said, citing the appointment of key ministers and the formation of a council of five elders. "Trust returns."
Mahathir tried to calm down CIMB Group leader Nazir Razak, brother of ousted prime minister Najib Razak, expressed his optimism about the markets last week by appointing a minister of finance who considered a safe couple Nevertheless, Moody's Investors Service and Fitch Ratings have warned that financial markets can survive the political transition by eliminating household risks if excise duty is abolished and not offset by other revenue enhancement measures.
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Here is a summary of market movements:
- The FTSE Bursa Malaysia KLCI Index rose 1
- 10-year government bond yields climbed 2 basis points to 4.15%
"Sudden sell-off is an anticipated market impetus," said Winson Phoon, Head of Fixed Income Research at Maybank Kim Eng Securities in Singapore. "The sell-off offers buying opportunities and we are slightly positive on local bonds."
On Saturday, the central bank confirmed the strength of the economy and said it will continue to ensure that conditions prevail on onshore financial markets. The ringgit will reflect Malaysia's fundamentals in the longer term, with the economy supported by a current account surplus, healthy reserves and low external debt, Governor Muhammad Ibrahim said.
"The appointment of Lim Guan Eng as Finance Minister, as well as the formation of the Council of Elders, which consists of significant Malaysians to advise the new government, has been well received in Malaysia," said Khoon Goh, director of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore. "While the fiscal implications of the new government policy, in particular the abolition of the GST and the reintroduction of targeted fuel subsidies, will create some uncertainty in the short term, higher oil prices will boost government revenues."
Unlike Lim, Mahathir brought back former central bank governor Zeti Akhtar Aziz and former finance minister Daim Zainuddin in an economic advisory council
The Pakatan-Harapan coalition had signed a foreclosure of excise duty within the first 100 days the government has applied and review toll road concessions. In a press conference on Thursday, Mahathir emphasized his focus on expanding the economy and reducing debt.
Malaysian Stocks In April, the record hit a record high as global funds invested more than $ 600 million in local stocks this year. The ringgit benefited from a recovery in crude oil prices and is Asia's best result last year.
"There are two moods in the markets now," said Ang Kok Heng, chief investment officer at Phillip Capital Management Sdn. "For consumer stocks and exporters benefiting from a weaker ringgit, it would be the case that bear stocks are politically linked to previous government and construction."