Matthews Asia Perspectives


Malaysia Elections Update

May 8, 2018

Malaysia's 14th general election delivered a surprise win for the opposition.


Malaysia's 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.

 

Sriyan Pietersz
Investment Strategist
Matthews Asia

 

 


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