Report: Malaysia stock market cheers change in key posts, exchange chief might be replaced

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KUALA LUMPUR: Moves by Malaysia's new government to change the guard at market regulators and state-owned firms have lifted the country's stock markets this week as investors hope for better governance and an end to decades of patronage politics.

The Malaysian stock index was the top gainer among Southeast Asian markets on Thursday as it scaled two-week highs. It has risen nearly 2 percent this week, during which the central bank governor resigned and sources said the stock exchange chief might be replaced.

Shares in Telekom Malaysia surged 10.7 percent on Thursday before cooling to finish 5.6 percent higher at 3.94 ringgit ($0.99), one day after its managing director resigned.

The telecommunications group is more than one-quarter owned by sovereign wealth fund Khazanah Nasional Bhd and 20.5 percent by Permodalan Nasional Bhd, the largest asset management firm.

The resignations appeared to be part of a series of top management changes initiated by Prime Minister Mahathir Mohamad's government.

"The buoyant market proves that the new government really means to have change," said Danny Wong, CEO of fund management firm Areca Capital. "The market believes that better corporate governance is ahead, which will benefit the economy and businesses."

The KLSE benchmark rose 1.25 percent on Wednesday. The index, which has lagged regional peers, is down 0.6 percent this year but has rallied nearly 4 percent since May 30, when it dropped to its lowest levels since December.

On May 9, Malaysians stunningly voted out a coalition led by Prime Minister Najib Razak that had ruled the country since independence in 1957.

The new government led by the 92-year-old Mahathir, who was prime minister from 1981 until 2003, is seeking to investigate allegations of graft during Najib's nearly decade-long tenure.

An investment banker, requesting anonymity, said many domestic and foreign investors have long felt that most government-linked firms can perform better than they have.

"With the changes sweeping the country, I don't think they would put cronies into these top positions, so there will be a more level playing field, and more quality candidates brought to the fore," he said. "The market is buying into that sense of optimism," he said.

"Market breathed a huge sigh of relief and more money is being deployed back in as there is a lot of pent-up demand," he added. - Reuters