Malaysian markets tumble; trading halted
Associated Press
KUALA LUMPUR, Malaysia — Malaysian stocks plunged today, forcing trading to be temporarily halted, amid political uncertainty sparked by the ruling coalition's electoral losses over the weekend.
The Kuala Lumpur Composite Index tumbled 10 percent to 1,166.32, triggering an automatic one-hour suspension of trading. The index recovered slightly after trading resumed but still ended the day down 9.5 percent at 1,173.22, it's lowest since March 2007.
Investors sold off shares after Prime Minister Abdullah Ahmad Badawi's National Front lost its two-thirds parliamentary majority in Saturday's general elections.
Stocks of companies closely linked to the National Front faced selling pressure amid concerns about the election's impact on government projects and economic policies.
"Stock markets don't like uncertainty, especially in a country like this where one party has been controlling the political scene for so long," said Marshall Gittler, chief Asian strategist at Deutsche Bank Private Wealth Management in Hong Kong.
"Malaysia has been seen as a defensive market that tends to do well when others do badly. Exposure to subprime is zero and reliance on foreign trade is less than in many other countries in the region. But now that there is political risk, the defensive aspect tends to melt away," he said.
The National Front held on to 63 percent of the 222 seats in Parliament, slumping from the 91 percent majority it won in 2004 elections. It also lost control of five of Malaysia's 13 states, including Selangor and Penang, the two most industrialized states.
State power company Tenaga Nasional shed 15 percent to 7.35 ringgit, while construction group Malaysian Resources Corp lost 34 percent to 1.27 ringgit.
"People are selling because they are concerned about policy uncertainty, project stagnation," said Joseph Tan, a strategist at Fortis Bank in Singapore.
"With the opposition being so much stronger this round, there is also concern that there may be a lot of government indecision and horse-trading with the opposition," Tan said.
