Share prices on Bursa Malaysia swiftly rebounded sharply on Thursday, with gains in banking and telecommunications blue-chips taking it to an all-time intra-high of 1,700.55 points, before ending the day at 1,688.46.
The FBM KLCI had earlier fallen by 1 per cent on Wednesday after the dissolution of Parliament, but the response from traders on Thursday morning was a 0.9 per cent surge upwards by 9.08 am, stabilising slightly lower by midday.
According to reports, foreign funds were the net buyers of the counters, acquiring RM392.5 million worth of stocks on Thursday, while local investors were net sellers.
The Wall Street Journal warned that investors were bracing themselves for “a bumpy ride” ahead of GE13, noting jitters in the share market with concerns over the possibility of a Pakatan Rakyat government.
CIMB meanwhile predicts that markets will rise sharply if Barisan Nasional secures another term in a “relief rally”.
If BN emerges as the victor in GE13, most analysts do not anticipate any change to Malaysia’s economic reforms under the Economic Transformation Plan (ETP). That could lead to another market surge as confidence is bolstered.
Citibank expects the benchmark FBM KLCI to hit 1,720 by year-end, supported by Malaysia’s resilient economy and strong fundamentals of companies, according to Bernama.
For now, though, investors are expected to retain an air of caution once the polling date is announced, the WSJ noted, as the potential of “a surprise Opposition victory may spawn a phase of uncertainty over several proposed infrastructure projects involving investments worth billions of dollars.”
Pakatan Rakyat leaders have already claimed that projects like the Lynas rare earths plant would be scrapped, something that could cost the economy billions of ringgit, setting back progress by years.
It is no surprise then that investors will be hoping for a strong mandate for Prime Minister Datuk Seri Najib Razak to ensure a period of continued economic development.