Politics may hurt Malaysian stocks: Analysts

MALAYSIAN stocks may be hurt as a possible election in Perak disrupts the government’s ability to tackle slowing economic growth, JPMorgan Chase & Co and Bank of America Corp’s Merrill Lynch unit said.

“The polls will prove a serious distraction at a point when the government should be focused on reviving the domestic economy with well-thought-out stimulus measures and execution,” JPMorgan analyst Chris Oh wrote in a report. “The economy and consequently the stock market should be big losers as a result.”

Malaysia’s Kuala Lumpur Composite Index is little changed this year after tumbling 39 per cent in 2008 amid the global recession and worsening financial crisis. The measure’s losses were the smallest among 14 equity markets tracked in Asia by Bloomberg.
The government is forecasting an expansion of 3.5 per cent in Malaysia’s economy for 2009, the slowest pace in eight years as the deepening global recession saps demand for exports.

Here, Economics and Accounting applied; the economic measures of growth rate of real per capita GNP and the absolute value of the rate of inflation are singled out as important. In accounting, the outcome of an election, may cause day-to -day fluctuations in market prices.

Last year, stock prices in Taiwan soared on Monday as investors welcomed Saturday's presidential victory Ma Ying-Jeou.

The market jumped more than 6 percent at the opening and closed up nearly 4 percent, on top of a 4.5 percent rise last week on expectations that Mr. Ma would win. Taiwan’s currency rose more than 1 percent, to settle in New York on Monday at 30.21 to the United States dollar, the strongest in more than 10 years.

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