BLAST FROM THE PAST: GENERAL ELECTIONS & MALAYSIA’S STOCK MARKET

PETALING JAYA – The local stock market has seen ups and downs in the run-up to general elections as well as after the polls, and SunBiz’s peek into the past shows how equities have performed in the last five general elections (GEs) as Malaysians vote on Wednesday in the “mother of all elections”.

In the 1995, 1999 and 2008 GEs, the stock market took a beating, with the local benchmark index falling 16.42, 11.25 and 123 points to close at 958.63, 734.66 and 1,173 points, respectively.

The key index fell 1.68% or 16.42 points to 958.63 on April 26, 1995, despite the Barisan Nasional (BN) scoring a landslide victory as retail and institutional investors preferred to remain cautious on the backdrop of continuing US currency worries.

In the case of the GE in 1999, although the ruling coalition retained its two-thirds majority, the stock market succumbed to selling pressure given the impressive gains made by opposition party PAS, which triggered concerns among local players who immediately squared their holdings of “sin stocks” – brewery, gaming and tobacco stakes.

This was exacerbated by the selldown that came from foreigners who were clearing their holdings in anticipation of the Y2K or Year 2000 computer crisis.

As for the historical GE12 in 2008, which saw the BN losing its customary two-thirds majority with five states going off its hands, the local equity market reacted to the results by staging a huge sell-off.

Nonetheless, in 2004 (GE11) and 2013 (GE13), the stock market breathed a sigh of relief after the elections with gains of 0.5% and 3.38%, respectively. Worth noting is that the FBM KLCI hit an all-time high of 1,826 points in early trade on May 6, 2013, the day after GE13, surging over 130 points or 7.75%, in the wake of BN’s victory.

Since GE13, the FBM KLCI has risen close to 90 points, or over 5%. Last Friday, the FBM KLCI closed down 9.97 points or 0.5% at its intraday low of 1,841.83 points.

– Sundaily

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