Malaysia stock market’s rally in 2024 buoyed by political stability but analysts warn of looming turbulence

During the height of COVID-19 in March 2020, the KLCI bottomed out at around 1,301 points exacerbated by the adverse impact of the pandemic on the global economy.

As of Monday (Nov 11), the benchmark index has since surged to around 1,609 points, a 23.7 per cent hike overall. 

Mr Ng Zhu Hann, founder and chief executive of boutique fund manager Tradeview Capital based in Kuala Lumpur, told CNA that the volatility in the Malaysia stock market between 2018 and 2022 clearly depicts how it is sensitive to leadership unrest.

“So if you look at the chain (of events that coincided) with that period, with the changes in administrations, political change from the Sheraton Move, it’s clear that the five year downtrend has to do with political instability,” said Mr Ng. 

The Sheraton Move refers to a political manoeuvre in 2020 which led to the fall of the Pakatan Harapan government and the resignation of Dr Mahathir Mohamad as prime minister.

This later led to multiple different prime minister appointments: First, with Muhyiddin Yasin in February 2020, and then Mr Ismail Sabri Yaakob in August 2021. 

Mr Anwar was appointed prime minister to head a unity government after the General Elections in November 2022 ended in a political stalemate. 

Mr Ng said: “Since 2020, the (Malaysia stock market) has gone up by almost 200 points, and this is making us one of Asia’s top performers over the past year, only behind Taiwan and India. There has been a resurgence but the KLCI has still not recovered from the 1,800 point level it was at during the peak in 2018.” 

On top of a spike in the market index, Mr Ng noted that Bursa Malaysia as a whole has also grown larger with its total market cap – one way of measuring value of a company based on its number of shares of stocks and the stock price – crossing the RM2 trillion (US$454 million) mark for the first time in May. 

“This has been a broad-based rally led by stocks in the property sector, banking and also utilities,” he added.