Stocks with Malaysian exposure hit on Singapore bourse, ringgit falls against US dollar

The move comes days after India

SINGAPORE: Stocks with Malaysian exposure were hit on Singapore bourse on Thursday morning (May 10) after Malaysia opposition's shock election win.

As at 10.01am, Singapore-listed stocks with Malaysian exposure such as Jardine Cycle & Carriage, IHH Healthcare and Hatten Land fell. Jardine C&C was down $1.01 or 3 per cent to $32.87, IHH Healthcare down three cents or 1.5 per cent to $2.00, and Hatten Land down 0.1 cent or 0.6 per cent to $0.16.

By 9.49am, Singapore's Straits Times Index was 4.64 point or 0.13 per cent lower at 3,543.90.

Malaysia's stock market is closed on May 10 and 11.

On the currency front, the ringgit weakened against the US dollar, with US$1 worth RM4.046 as at 9.12am, up by 5.75 sen or 1.4 per cent, according to data from Bloomberg.

The Singapore dollar dipped against the ringgit, trading at RM2.935, down by 1.19 sen or 0.4 per cent, close to a two-year low.

Credit ratings agency Moody's described the market's uncertainty, saying: "The country has never witnessed a transition of power away from the Barisan Nasional since its independence in 1957. Little is known about the opposition's full range of economic policies, and its electoral pledges have lacked details that would allow for a full assessment of their budgetary and macroeconomic impact.

"Some campaign promises, if implemented without any other adjustments, would be credit negative for Malaysia's sovereign. These include a proposed abolishment of the GST which, without offsetting measures, would increase Malaysia's reliance on oil-related revenues and, in the near term at least, narrow the government's revenue base.

"Another policy pledge, the reintroduction of fuel subsidies, would also distort market-determined price mechanisms, with effects on both the fiscal position and balance of payments."

Oanda Trading Market called the overnight results announcement "stunning", adding that this is creating "quite the stir" with foreign investors trying to decipher the mandate of former Malaysian prime minister Mahathir Mohamad's Pakatan Harapan party.

"The thinly traded one-month NDF (non-deliverable forward) markets have shot up on the election results above 4.05 in response to the anticipated knee-jerk weakening on Malaysian assets as indicated. It added that the USD/MYR had pulled up 1.75 per cent in the pre-election run-up, but with the NDF now printing 4.075, the ringgit now sits at the bottom of the regional currency pecking order.

It also agreed that abolishing the GST and accelerating fiscal spending could be interpreted negatively, given the drain on government coffers, which would be credit negative for Malaysia. - Straits Times, Singapore