No quick fixes to the despair in Malaysian stock and currency markets

KUALA LUMPUR: The bumpy ride in Malaysia’s financial markets is about to get bumpier as expectations for an uptick in foreign and domestic investor sentiment following the appointment of Mr Anwar Ibrahim as premier in November last year have dissipated.

The road to economic recovery has been undermined by a clutch of external factors and the failure of the new administration to provide fresh direction for the economy and seriously tackle issues facing Malaysians.

Among the issues include the persistent spikes in the cost of living for ordinary Malaysians that have in turn raised political concerns.

The hawkish stance by the US Federal Reserve on interest rates has also drawn away foreign funds from the local stock and currency markets. 

According to MIDF Research, foreigners have been net sellers of Malaysian equities for 17 out of the 23 weeks since the beginning of the year, chalking up a net outflow of RM3.4 billion (US$727.5 million) and turning the Malaysian stock market into one of Asia’s worst performers. 

The FBM KLCI, the primary benchmark for investors of the Malaysian stock market that hovers just below 1,400 points, has lost more than 7 per cent this year, compared to the Singapore FTSE Straits Times Index, which is up 0.27 per cent for the same period.

The ringgit also continues to be mauled. At the end of May, the Malaysian unit emerged as Asia’s worst performing currency against the US dollar after Japan and hit RM4.66 to the greenback on Jun 22. It also touched a record low of RM3.47 to the Singapore dollar on the same day.