KUALA LUMPUR (BLOOMBERG) - Foreign investors in Malaysian stocks are voting with their money after Mahathir Mohamad's surprise election win.

After a volatile start to trading on Monday morning, the nation's benchmark FTSE Bursa Malaysia KLCI Index has stayed resilient with a gain of 0.4 per cent this week.

But overseas investors are not taking any chances. The nation's foreign inflows this year have more than halved after foreigners sold US$375.6 million (S$504.5 million) of stocks in two days after markets reopened this week.

"The ripple effect from the election results is still there," said Danny Wong Teck Meng, chief executive officer at Areca Capital Sdn, by phone in Kuala Lumpur.

"Foreigners might not want to sit through this uncertainty for the next 100 days or so of the new administration."

The nation's stock market still remains as one of the only emerging markets in Asia that has attracted foreign buyers, with about US$260.6 million in inflows so far this year.

This could change if foreign investors maintain their selling momentum.

Local institution funds and retail investors are positive on the market and they do not worry much about the uncertainty, as the market is driven by positive sentiment now, Wong said.

"Now it's down to how fast Mahathir can influence to form things as quick as possible. The restructuring is good for the economy," he said.