Matthews Asia Perspectives
Malaysia Elections Update
May 8, 2018
Malaysia's 14th general election delivered a surprise win for the opposition.
14th general election delivered a surprise win for the opposition
Pakatan Harapan (PH) coalition led by former Prime Minister Mahathir Mohamad,
now age 92, who unseated the ruling Barisan Nasional coalition led by the
United Malays National Organisation (UMNO) that had held power for 61 years.
Market focus will revolve around PH's election pledges. Among them is the
replacement of the Goods and Services Tax (GST) with the prior Sales and
Services Tax (SST); reinstating fuel subsidies within the administration's
first 100 days in office; increasing social expenditures and reviewing all
major public projects as well as China investments. From an investment flows
perspective, Malaysia has had significant inflows over the past 12 months
against outflows, compared to the rest of ASEAN. The bond market›s response,
however, is likely to be pivotal as the size of flows are significantly larger
than equity flows, and will likely be a major determinant of the Malaysian
ringgit's strength over the near term given its status as one of the
best-performing currencies in the past year.
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