“Have you heard of the song ‘Comfortably Numb’ by Pink Floyd?” said Ng, a director of Fortress Capital Asset Management, in a phone interview in Kuala Lumpur.
“That’s how we would describe the period right now for the Malaysian market.”
Najib announced today that Parliament would be dissolved tomorrow. The election must be held within 60 days after dissolution of the legislature.
Malaysia’s stock gauge, home to the world’s longest bull market run, climbed less than 0.1% at the close in Kuala Lumpur. The gauge is up more than 2% this year, with its 50-day historical price volatility elevated at a two-year high.
Investors will be on the sidelines from now till the elections, Ng said.
“Every polls will have some uncertainty and investors will have to take it in their stride,” Ng said. “Market reaction is always dependent on the quantum of a win on either side. Market expectations are for the ruling coalition to continue.”
Phillip Capital Management, meanwhile, sees any result being met with muted reaction as concerns focus more on trade tensions between the US and China that’s kept Asian equities on edge.
“The strategy to outperform the market would still be a bottom-up approach to invest in stocks selectively, said Ang Kok Heng, chief investment officer at Phillip Capital. “I don’t think there would be any impact, people are more concerned about trade war than elections.”
Alan Richardson of Samsung Asset Management said with risk aversion having risen since March from the trade spat, there is little tolerance for political risk in Malaysia.
The FTSE Bursa Malaysia KLCI Index is up 120% from its October 2008 low in the longest bull market among nations in the MSCI All-Country World Index.