Malaysian shares rally as Anwar appointed as new prime minister

SINGAPORE (ICIS)–Malaysian shares rallied on Thursday following news that opposition leader Anwar Ibrahim was appointed as the country’s new prime minister, ending a five-day political impasse.

The benchmark FTSE Bursa Malaysia KLCI index gained 4.04% to close at 1,501.88, with most stocks on the main index setting their best session since November 2020.

PETRONAS Chemicals Group, the country’s largest petrochemicals producer, settled 3.19% higher, while palm oil giant and oleochemicals maker FGV Holdings was up by 2.27%.

Anwar was sworn in as Malaysia’s 10th prime minister on Thursday afternoon, hours after his appointment by Malaysia’s King Sultan Abdullah following a meeting with fellow rulers at the national palace. He will be the head of government for the next five years.

The elections on 19 November produced the country’s first-ever hung parliament as neither Anwar nor ex-premier Muhyiddin Yassin won the simple majority needed to form a government.

Anwar’s appointment follows recent positive economic data for Malaysia, with third-quarter GDP growing by 14.2% year on year, extending the 8.9% expansion seen in the preceding quarter.

The economy will continue to expand, albeit at a more moderate pace, in the fourth quarter of 2022, Bank Negara Malaysia said in a statement.

The Malaysian economy is expected to expand by 4.0-5.0% next year, the central bank said.

The country’s economy grew by 3.1% year on year in 2021, reversing the 5.5% contraction in 2020.

“The Malaysian economy will continue to be supported by firm domestic demand amid continued improvements in the labour market. Growth would also benefit from the realisation of large infrastructure projects as well as higher tourist arrivals,” Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said.

“However, Malaysia’s growth remains susceptible to a weaker-than-expected global growth, higher risk aversion in global financial markets, further escalation of geopolitical conflicts and re-emergence of supply chain disruptions,” she added.

Focus article by Nurluqman Suratman