BURSA Malaysia has declined by more than 1% so far in 2019, making it the only loser in the region while neighbours Singapore and Indonesia have posted gains of 4% and 3% respectively, reports Bloomberg.

Analysts said the downward trend is unlikely to improve any time soon as investors wait for Pakatan Harapan to make good of its pledge to cut the budget deficit, clamp down on corruption and boost purchasing power.

“Anybody who is taking a long-term view in Malaysia over the next five to 10 years needs to be quite patient for the next two to three years,” Jalil Rasheed, a Singapore-based investment director at Invesco Asset Management, told Bloomberg.

As investors hold back while the new government undertakes measures to clean up its administration and get the economy back on track, Malaysia’s earnings lagged behind its neighbours’ to fall 3.15% last year, compared with 8.8% rise for Singapore and 18% gain for Indonesia, said the report.

Despite announcing a five-year economic plan that promised transparency and institutional reform last year, investors are waiting out the expected “execution risk, implementation risk and obviously a lot of political risks”, said Alexander Chia, head of regional equity research at RHB Bank Bhd.

Lingering investor jitters also stem from the political uncertainty surrounding an expected handover of power from Prime Minister Dr Mahathir Mohamad to Anwar Ibrahim next year.

“It’s difficult to have a positive outlook when there is political infighting and weak outlook on growth from fiscal tightening,” said Alan Richardson, a regional fund manager at Samsung Asset Management Co in Hong Kong.

“There appears to be frustration with a lack of tangible benefits under the new government and the shadow of race-based politics.”

The weak performance of the Malaysian bourse is expected to last towards year-end and analysts expect a rebound when the government charts out better-than-expected spending in Budget 2020. – March 12, 2019.