Newsflash | Muhyiddin Resigns as Prime Minister
SHARE THIS PAGE:
ADDED:
17 August 2021
PREPARED BY:
PM Signs Off

Swirling rumours surrounding the resignation of Prime Minister Tan Sri Muhyiddin Yassin was confirmed this week after he lost the majority support of MPs in the Perikatan Nasional (PN) coalition. In a press conference, Muhyiddin announced his resignation as the country’s 8th Prime Minister less than 18 months into his tenure.

However, he will stay on as caretaker Prime Minister until a successor is appointed. In a Palace statement, the Yang di-Pertuan Agong in consultation with the Election Commission concluded that a general election would not be advisable due to the pandemic situation.

What Happens Now?

The PM’s resignation both lengthens and increases uncertainty as the eventual coalition formed can create policy delay, changes as well as the coalition being unstable itself.

This might or not might not be clarified soon, therefore we need to keep reassessing new developments to adjust our views and strategy accordingly.


We think the least negative impact to the market in increasing order is:-

  • Continuation of the current administration either under Deputy Prime Minister Datuk Seri Ismail Sabri or even Tan Sri Muhyiddin Yassin as the party could have the largest minority coalition
  • Barisan National
  • Pakatan Harapan - If history repeats itself, the coalition represents the most policy and personnel changes during its tenure
  • A unity or bipartisan government – As it is unprecedented, its impact on market can be harder to evaluate at this point.

Whatever coalition that wrest control of Parliament will benefit from the vaccination work done and reap the benefits of economic reopening, as well as less selling pressure by government-linked investment companies (GLICs) from the expiry of the various withdrawal schemes.

How Are We Positioning?

For conventional funds, coming from a heavily invested level, we believe reducing some weights for cash optionality is prudent in this environment. Shariah funds have higher cash levels going into this crisis due to less reopening play options and significantly weaker market vs conventional.

Technology, retail, healthcare, and manufacturing sectors offer the least political risk although not from a valuation perspective.

Banks, government linked companies and politically linked stocks are at risk now due to potential for more national duty given the limitation of our fiscal and monetary policies to stimulate the economy. This is a risk and not an eventuality, as a new coalition might not go down this route or it might not be necessary if the economy opens with pent up private sector consumption.

If politics can stabilise combined with economic reopening, there is potential for a 5%-10% bounce towards the year end. We favour:
a. Reopening plays like banks, retail, property, healthcare
b. Global growth plays like technology, manufacturing
c. Digitalization theme like telco, payment companies

Disclaimer
This article has been prepared by AHAM Asset Management Berhad (“AHAM Capital”) (formerly known as Affin Hwang Asset Management Berhad) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to AHAM Capital and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of AHAM Capital.

The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, AHAM Capital makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions.

As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product.

AHAM Capital is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers.

AHAM Capital and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities.

Neither AHAM Capital nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.
Hello, I'm Nadia. How may I help you?
Talk to Nadia
Close
Not sure what to ask? Try these.
  1. I forgot my i-Access password.
  2. How to perform redemption?
  3. What is the minimum amount to open an investment account?
  4. Checklist for deceased redemption.
  5. What is the best fund for me?
<  Slide to cancel
I'm listening ...
Click to stop recording
Ooops!
Generic Popup