Malaysia stocks soar, ringgit jumps on optimism over PM decision

The benchmark FTSE Bursa Malaysia KLCI Index rallied 3.8 per cent to 1,498.37 at 4:15pm, poised for its best day since March 2020. PHOTO: BLOOMBERG

KUALA LUMPUR – Malaysian stocks had their biggest jump in over two years and the ringgit surged after veteran opposition leader Anwar Ibrahim was named the new prime minister on Thursday, ending a political impasse that has weighed on markets this week.

The benchmark FTSE Bursa Malaysia KLCI Index rallied 4 per cent to close at 1,501.88 points, its best day since March 2020.

Gaming and brewery companies, including Genting Malaysia, Sports Toto, Magnum and Carlsberg Brewery Malaysia, rose as the pro-Malay, Islamist alliance Perikatan Nasional lost out on its bid to form the government.

The ringgit shot up 1.8 per cent to 4.4910 against the United States dollar as at 5:20pm, in its best showing since 2015 and was the top performer in Asia.

It gained 1.2 per cent to 3.2687 against the Singapore dollar from its Wednesday’s close of 3.3074.

Malaysian assets had traded in a narrow range this week as investors awaited an announcement from the country’s monarch on its next prime minister after Saturday’s general election resulted in an unprecedented hung Parliament.

“It is certainly a relief to get clarity and some certainty on the leadership, especially from someone with the charisma and proclivity to bridge differences to build a government,” said Mr Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “The hope is that this is indeed a lasting resolution of disruptive political shifts rather than an unstable equilibrium.”

Datuk Seri Anwar’s reformist Pakatan Harapan will lead the next government after being chosen by Sultan Abdullah Ahmad Shah, the palace said in a statement. The Malaysian King intervened after no alliance secured a majority in a general election in which Mr Anwar’s coalition won the most seats.

“His Majesty reminds all quarters that whoever wins, does not win all, and those who lose, do not lose all,” the palace said. “The people should not be burdened by endless political turmoil, as the country needs a stable government that will boost the economic landscape and national development.”

Mr Khoon Goh, head of Asia research at ANZ, said: “While we know for certain that Anwar will be the 10th prime minister and lead a coalition of Pakatan Harapan and Barisan Nasional, in terms of what it means for policy or Cabinet appointments, we need to wait for more clarity.”

He added: “What investors will be looking for is who will become finance minister, whether there will be any changes to the budget tables by the previous government or any inkling that Pakatan Harapan would introduce a GST (goods and services tax).”

As premier, Mr Anwar will have to address soaring inflation and slowing growth, while calming ethnic tensions.

The most immediate issue will be the budget for next year, which was tabled before the election was called but has yet to be passed.

Mr Anwar will also have to negotiate agreements with lawmakers from other blocs to ensure that he can retain majority support in Parliament.

The King’s decision secured the premiership for Mr Anwar, but voters acknowledged that the close margin in Parliament may mean more turmoil ahead as Mr Anwar’s government takes shape.

“It is definitely a momentous occasion,” said banker Julian Cheong. “What remains to be seen is how the next five years will pan out.” BLOOMBERG, REUTERS

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