Broader Asian stock markets dropped after a surge in Covid-19 cases in the United States and Europe rattled hopes of a global economic recovery, building on uncertainty posed by the looming U.S. presidential election.
Doubts swirled over the support Malaysian Prime Minister Tan Sri Muhyiddin Yassin commands, particularly after the king's rejection.
The Malaysian PM is facing a leadership challenge from an opposition leader and infighting within his ruling coalition, and critics have accused him of using the request for emergency rule as a pretext to suspend parliament and avoid a test of his razor-thin parliamentary majority.
By midday, the Malaysian benchmark stock index was down 0.7% and the ringgit was perched at a four-week low, down 0.2% at 4.164 against the dollar.
"Struggling to recover from the pandemic-triggered recession right on the heels of weathering US-China trade war ripples, the last thing Asean economies need is a political crisis," analysts at Mizuho said, referring to the political situation in Malaysia and Thailand.
Thailand's biggest opposition party called on Monday for Prime Minister Prayuth Chan-ocha to resign, as the parliament opened a special session called by the former junta leader to discuss months of protests.
Thai equities pulled back slightly to 1,213 after see-sawing for most of the session and the baht traded slightly lower.
Analysts at Phillip Securities noted that the focus remained on the special parliamentary session, with the Thai equity market set to hover between 1,200 and 1,220 until the crisis was resolved.
Taiwan's dollar was among the most sought-after currencies in the session, gaining more than 1.1% to touch a two-week high.
The currency is the region's top performer so far this year with a 5.2% gain, as the work-from-home shift fuelled demand for the country's key chip and semiconductor exports, offering a buffer to the economic blow from the pandemic.
Data showing a surge in Singapore's factory output in September failed to offset the subdued broader mood, with shares barely budging on the numbers. The stock index fell 0.3% and the Singapore dollar also slightly weakened. - Reuters
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