Political overhang in capital market will fade


  • Corporate News
  • Friday, 05 Jan 2018

Tengku Datuk Seri Zafrul Aziz said the markets would quickly factor in any positive or negative impact from the election.

PETALING JAYA: The political overhang in the capital markets due to the impending general election (GE) will fade as long as the economic fundamentals remain intact.

CIMB Group Holdings Bhd chief executive officer and executive director Tengku Datuk Seri Zafrul Aziz said the markets would quickly factor in any positive or negative impact from the election.

“But what is important is that the underlying fundamentals of the economy remain strong. The fundamentals are strong and the economy is growing. We should have a good performance from the banking sector,” he told reporters at CIMB’s Corporate Day.

To a question, Tengku Zafrul said some corporations were waiting for the election to be over.

However, he also pointed out that despite the various cycles that the country has seen in the past five years, there were capital flows into the equities and bond markets.

The GE is due to be held this year. So far, it has not affected sentiment on the stock market, which has surpassed the 1,800-point mark, or the ringgit that has appreciated some 10% against the US dollar over the past one year.

CIMB group wholesale banking, treasury and markets group head Chu Kok Wei said the election has to happen this year and the markets would get over it. “We do see better upside to corporate investment activities, and hopefully, that will translate to fund-raising in both the loan and capital markets,” he said.

Merdeka Centre programme director Ibrahim Suffian told participants in his presentation during the half-day event that the ruling coalition Barisan Nasional’s (BN) victory in the GE was a certainty.

He said BN was 13 seats away from getting a two-third majority and may be in a position to regain that status.

He also said that PAS, which has broken ranks from the Opposition pact of Pakatan, was the kingmaker in the run-up to the GE, but would likely lose greatly thereafter.

He said that PAS appeared keen to prevent Pakatan from winning and was ready to assist Umno on the grounds of preserving the Malay political hegemony.

He did not discount the possibility of PAS losing the state of Kelantan and many seats in Selangor but could be rewarded later.

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