The Malaysian GE14 – An Investors Perspective (Teaser Article)

equities ge14 malaysia stocks May 31, 2018

by: Tam Ging Wien

All examples and stocks quoted here in this article and on the ProButterflyTM site are for learning purposes; it does NOT constitute financial advice or a Buy/Sell recommendation. Contents are reflective of personal views and readers are responsible for their own investments and are advised to perform their own independent due diligence and take into account their own financial situation. If in any doubt about the investment action you should take, you should consult a professional certified financial advisor.

The "Malaysian General Elections (GE14) – An Investors Perspective" series is intended to discuss and generate investment themes and ideas, but it should NOT be misconstrued or otherwise interpreted as financial advice.

As you are certainly aware by now, on the 9th of May 2018 was the historic Malaysian General Elections (GE14) which ended the 61 year Barisan National rule in Malaysia by a wide margin.

Yes, ProButterfly co-founder Tam Ging Wien was back in Malaysia to play his part and is proud to be a part of this historical moment in Malaysia's history!

In conjunction with the Malaysian General Elections (GE14), ProButterfly decided that that we will be running a series of investing articles both on our blog and weekly newsletter on the theme of the Malaysian GE14. We will discuss and share our view on the implication of the change of government, the impact on the economic and look at stocks that may be impacted.

Be sure to follow us in the coming weeks to learn more about the profile of Malaysian listed stocks!

The Malaysian General Elections (GE14)

By now, the region is already coming to terms with the surprised victory of the Pakatan Harapan coalition led by former UMNO strongman and former Prime Minister of Malaysia – Dr Mahathir Mohamad.

In a surprising turn of events, the UMNO led Barison National party headed by caretaker Prime Minister Najib Razak ended its 61 year rule in Malaysia by a wide margin. Pakatan Harapan managed to secure 121 seats while Barison National captured only 79 seats out of the total 222 parliamentary seats. The Islamic Party of Malaysia (PAS) and other independent candidates took the remaining seats.

At the state level, Pakatan Harapan captured the states of Kedah, Penang, Perak, Selangor, Negeri Sembilan, Malacca, Johor and Sabah.

The public’s mistrust in Najib’s leadership over countless alleged corruption scandals was widely cited in mass media as the key for Barison National’s downfall. His wife – Rosmah Mansor’s extravagant spending and penchant for lavish jewellery and designer handbags did not help his public image either. Najib has consistently denied any wrongdoing.

Pakatan Harapan coalition (or the “Alliance of Hope” in English) consist of 4 major component parties and one allied party:

  • Democratic Action Party (DAP) – headed by Lim Guan Eng
  • People's Justice Party (PKR) – headed Dr Wan Azizah Wan Ismail
  • National Trust Party (AMANAH) – headed by Mohamad Sabu
  • Malaysian United Indigenous Party (PPBM) – headed by Muhyiddin Yassin
  • allied with Sabah Heritage Party (WARISAN)

Overall, Pakatan Harapan is headed by Chairman Dr. Mahathir Mohamad.

Shortly after winning the elections, Dr. Mahathir Mohamad declared a 2 day public holiday. Immediately after being sworn-in as the new Prime Minister, he got down to work to discuss, declared the 10 key ministries, and appointed the component party leaders as the ministers (making sure to emphasise that all ministries have equal standing within the government):

  • Deputy Prime Minister – Dr Wan Azizah Wan Ismail
  • Finance Minister – Lim Guan Eng
  • Home Affairs Minister – Muhyiddin Yassin
  • Defence Minister – Mohamad Sabu

Recognising that some of the new generation of leaders with still inexperienced as running a government, he unveiled a 5-member team of Eminent Persons to advance the newly formed government on economic and financial matters to achieve the promises made by the Pakatan Harapan in their campaign manifesto:

  • Former Finance Minister Tun Diam Zainuddin
  • Former Bank Negara Governor Tan Sri Dr. Zeti Akhtar Aziz
  • Former President and CEO of PETRONAS Tan Sri Hassan Merican
  • Malaysian billionare businessman Robert Kouk
  • Prominent economist Prof. Dr. Jomo Kwame Sundaram

It was clear that the 93 year old premiere still sharp and commanded tremendous influence and respect. His quick thinking and action to declare a 2 day public holiday gave him a chance to appoint his team to key ministries, setup the Eminent Persons advisory council, arrange for a royal pardon for jailed leader Anwar Ibrahim, initiate investigations on alleged misappropriation of fund during Najib Razak term in office and make various speeches, press conferences, press releases and announcements to calm the public during the current time of uncertainty.

Market Moves

As the Malaysian market was closed during the long weekend, the iShares MSCI Malaysia Index Fund (EWM) traded on the NYSE ARCA whipsawed plunging 6% from US$34.50 to close at US$32.42. Just 2 days later, it recovered back above US$34.50 on 15-May.

Source: Yahoo Finance

Back in Malaysia, the Kuala Lumpur Composite Index (KLCI) initially opened down on 14-May but quickly recovered. It is currently trading above the 1,846.51 close on the eve of the elections. It was clear that the quick actions of the veteran leader had led helped to calm the markets. Unlike chaotic uncertainty that ensued following the shocking Brexit results, the markets reacted fairly calmly and normalised within a matter of days showing strong confidence in the newly formed government.

Source: Yahoo Finance

As Malaysian now celebrate a new dawn in the nation’s political history, the euphoria of Pakatan Harapan engineering one of the most stunning electoral triumphs in Asia will continue to linger on for weeks and months to come. The people of Malaysia has spoken and where clearly heard.

As days go by, the drama of this administration change continue to unfold, the clock is now ticking against the new Pakatan Harapan government to implement its series of electoral promises to the people who have put them in power.

In The Weeks Ahead...

In the weeks ahead we will be discussing a range of topics including a summary of the Pakatan Harapan Manifesto, the various related investment themes to ride on as result of the implementation of the manifesto and perhaps a deep dive into the 

We will be watching the political developments in Malaysia very closely over the coming weeks.

Be sure to follow us to learn more about the profile of Malaysian listed stocks!

We will be releasing our views in advance to our ProButterfly subscribers before posting it on our blog, so be sure to subscribe in the link below:


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