BARISAN Nasional (BN) is expected to gain a comfortable majority over Parliament in the 15th General Election (GE15) that is “neutral to mildly positive” for the local stock exchange, said a research house.
Taking a cue from the results of several by-elections and three state elections since GE14, UOB Kay Hian Securities (M) Sdn Bhd said that the Umno-led coalition is expected to secure a comfortable majority in Parliament in the upcoming GE15.
Its rationale is based on the view that the majority of voters will likely favour Umno in a scenario/perception of a more divisive and weaker, relative to GE14, Opposition coalition, Pakatan Harapan (PH) and many multi-cornered contests for parliamentary seats.
“The dramatic shift in voter sentiment since GE14 was witnessed in the Johor state election where BN enjoyed a landslide victory. Such voter sentiment against PH was clearly shown in Merdeka Centre for Opinion Research’s survey.
“Although public dissatisfaction has also been rising since the creation of backdoor governments, voters would still be partial to BN, judging by most of the post-GE14 by-election and state election results,” it said, making references to the Kuala Lumpur-based independent political research firm.
In the 17-page report released yesterday, UOB Kay Hian noted that PH, led by former Deputy Prime Minister Datuk Seri Anwar Ibrahim, has lost significant public support.
“Voter backlash against the appointment of PH’s component party DAP leader Lim Guan Eng as finance minister, and PH’s hasty implementation of or soundbites on market-unfriendly policies (e.g., buying out toll road operators at unreasonably low prices) were the key reasons for the fast-deteriorating public perception of PH after it came into power.
“On the political front, PH was unable to garner the crucial support from Gabungan Parti Sarawak (which is openly opposed to DAP) during the Yang di-Pertuan Agong’s (who acted as the arbiter) tally of majority parliamentary support in deciding the winner in effectively a three-corner contest for premiership between the PH, DAP and Tun Dr Mahathir Mohamad (who proposed forming a unity government),” it said.
On the stock market front, it said GE15 is neutral to modestly positive for the benchmark FTSE Bursa Malaysia.
Notwithstanding external concerns, it expects GE15 to be neutral to modestly positive for Malaysian equities in its base case scenario of BN securing a comfortable majority in Parliament.
“We gauge that there is low investor appetite for bidding up stocks linked to Umno, unlike in past regime changes prior to the 2018 GE. A fundamental reason is the government’s fiscal stress, which limits megaproject rollouts.
“It is interesting to note that in our performance review of government-linked companies and the various perceived politically-linked groups over the past four GEs, there were no discernible market outperformances by these clusters before or after the polling dates,” it said.
Expecting some trading opportunities tied to GE15 speculation, the research house has advised sticking to fundamentally sound and liquid stocks, with its top picks in this theme being large caps CIMB Group Holdings Bhd, Gamuda Bhd, Malayan Banking Bhd, My EG Services Bhd and RHB Bank Bhd. — TMR / pic Bernama