21st November 2022 - 3 min read
Local stock exchange Bursa Malaysia saw investors offloading shares in its early morning trade session today, attributed to market uncertainties following the unexpected result of its 15th general election (GE15).
The early morning sell-off saw the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fall 1.5% to a session low of 1,4277.75, from its closing 1,449.32 last Thursday (17 November 2022). It subsequently staged a small recovery, climbing back up to 1,442.30 as of the time of writing.
Heading the list of top losers this morning were several entities from the gaming and brewery sectors – typically dubbed the “sin sectors” – with decline of between 4.9% to 9.4%. Under the brewery sector, Heineken Malaysia Bhd saw its stocks fall by 5.2% (RM1.32) to RM23.46, whereas Carlsberg Brewery Malaysia Bhd declined by 4.9% (RM1.14) to RM22.06.
As for gaming stocks, lottery operator Magnum Bhd dropped by 9.4% (14 sen) to a five-year low of RM1.35, while Sports Toto Bhd plunged by 8.57% (15 sen) to RM1.60. Casino operator Genting Malaysia Bhd also sunk by 19 sen to a two-year low of RM2.53, as its parent company Genting Bhd slid 6% (29 sen) to RM4.21.
Investors’ nerves are rattled as Malaysia faces its first-ever hung Parliament after GE15, a situation where no political party has enough seats to secure a simple majority to form the next government independently. As such, politicians are now scrambling to form coalitions to gain the upper hand, and investors are nervous about the prospects of various economic sectors – such as sin sectors – under different coalitions.
“Gaming and brewery stocks can face heavy selling pressure, while foreign selling of blue chips exerts more downside pressure on the FBM KLCI this week if investors perceive that a non-centrist government has taken charge,” said TA Securities Sdn Bhd.
The research house also noted that although all coalitions’ manifestos currently do not contain restrictions on the gaming and brewery sectors, regulatory limitations may be imposed in the future. Breweries, for instance, may see a cap on beer sales, or curbs on entertainment outlets. Casinos and betting operators, too, may have their licences suspended or terminated.
Meanwhile, the head of regional equity research at RHB Bank, Alexander Chia predicted that investors’ sentiment will likely “remain clouded” for this week. He also said that the situation will evolve “depending on the duration of the power vacuum, the quality of the Cabinet members, and the parliamentary majority of the eventual government that will determine its ability to institute reform.”
Aside from the stock market, Malaysia’s currency also slipped against the greenback by almost 0.8% this morning, to 4.5872. It gradually recovered after to trade at 4.5585, but economists have commented that the current circumstance will take a significant toll on the country’s economy and currency value if not resolved soon.
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