29 April 2018

Where will the local market heading to after GE14 ???

Yeah... It's drawing closer and closer now. The election war officially started on nomination day where we see troops of supporters from both sides (even 3 corner fight) raving from the nomination center till various social media platforms.

The ruling party already flooded your favorite YouTube, News portals, and TV channels with their campaign manifesto, while opposition parties holding ceramah day-and-night nationwide to draw the attention of voters on top of their usual Facebook reach-out strategy.

The current ruling government was expected to continue its power by most analysts given the split of votes on the opposition side. Anyway, everything is possible in the current world judging from the surprise outcome from Brexit, UK election, US presidential election...

Would Malaysia follow the surprise trends of the world?
Let's see and investors should prepare for the different outcomes of the result.

Outcome #1: Barisan National (BN) win
This is the most favorite outcome many are expecting. All the government policies will be carried out as planned. A relief rally in the local equity market was expected minus out all the uncertainties of the future of our country. Foreign funds might be pouring money back the country then, pushing up blue chip counters especially.

Hence, same goes for local currency. Construction and building materials sectors might see the strongest uptrend in this case, following the removal of doubts on big projects given earlier such as HSR, ECRL, Bandar TRX, MRT, LRT3...

Outcome #2: Opposition pact win
UBAH is the slogan of the largest opposition pact Pakatan Harapan (PH) using the PKR logo. By changing the current ruling party which holds on to power since independence is an uphill task. It's uncommon but still, it may happen. If PH emerged as the winner, then uncertainties will prevail and this could jeopardize the current government contracts/projects being dished out earlier.

Thus, the market will react negatively over the short-term period until more and more certainty (in terms of government policies and directions) being laid out. Thereafter, the market would likely continue its uptrend as long as the fundamental of the economy still intact. Most likely, GLCs will be the first victim. Anyway, it will be a short-term reaction and market will normalize after that.

Suddenly think of William 'Hung' for the 3rd possible outcome
Outcome #3: Hung parliament
Also, never happened before in Malaysia history, this outcome is the worst of all. Instead of short-term negativity, this could drag longer until all parties (including Islamic party PAS) come to a consensus and determine how to work together in forming the next government. Given the complexity of various parties from both camps, it's rather difficult to solve the equation overnight.

Consequently, a big sell-off in the local market was expected and investors would rather wait-and-see on the sidelines until the dust finally settled. Last year, we witnessed this outcome in Germany and it takes months just to form a government. Hmmm...

Your vote on 9 May is important !!!

No matter what the outcome will be, Finance Malaysia Blog urge every eligible Malaysians to come out and vote for the future of this beloved country. The above is just a reference for local investors, regardless of political party and races. We love this country and we're all Malaysians!


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