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Malaysian Stocks, Ringgit Soar After ‘Market-Foe’ Mahathir Calms Nerves

Courtesy of ZeroHedge. View original post here.

Market watchers had expected equities to fall across the board, as well as currency weakness which was anticipated mid-week, since Mahathir said in an interview last month with Bloomberg, when asked whether he'd consider repegging the ringgit to ward off "currency manipulators":

When a currency weakens, the country loses money, the people lose money and costs of imports go up and generally the economy can’t do well. Capital control would become necessary in unusual situations.

He stood up to traders betting against his country in the 1997-98 Asian financial crisis, imposing capital controls, and berated the legendary George Soros as a "moron." As recently as 2010, he told Bloomberg that currency trading was "silly," reflecting his preference for the bygone era when exchange rates were fixed.

But stocks and the Ringgit are soaring as dip-buyers scream into Malaysia following his first remarks as prime minister of Malaysia, where Mahathir said he’d lead a business-friendly administration and find ways to boost the nation’s equity market.

Last week's tumble in the currency is gone…

And the Malaysia stock market was panic bid after opening dramatically lower…

Bloomberg notes that Nestle (Malaysia) Bhd., a unit of Nestle SA, added 4.2 percent after Mahathir’s coalition pledged to abolish the nation’s current goods and services tax, along with fuel subsidies and minimum wage realignment.

However, not all Malaysian stocks soared.

Gamuda Bhd., the nation’s largest construction company, fell 17 percent — the most in a decade — after the new government said it will review the projects by the previous administration.

And a slew of companies related to former Prime Minister Najib Razak’s Barisan Nasional party tumbled… (via Bloomberg)

  • Family ties: CIMB Bank Bhd. (chaired by Najib’s brother Nazir Razak) slid 5.1 percent; Opcom Holdings Bhd., whose CEO Mokhzani Mahathir is Mahathir’s son, rallied 50 percent. Thriven Global Bhd. more than doubled in value, while Eden Inc. Bhd. surged 171 percent. The two companies’ chairman Fakhri Yassin Mahiaddin is the son of Muhyiddin Yassin whom Mahathir named home affairs minister Saturday

  • Government services providers: My E.G. Services Bhd. plunged 30 percent; Datasonic Group Bhd. slid as much as 8.4 percent

  • DRB-Hicom Bhd. fell 7 percent. The company sold a stake in national carmaker Proton Holdings Bhd. last year to China’s Geely Automobile Holdings Ltd. Mahathir was opposed to giving foreign investors control over Proton

  • Felda Global Ventures Bhd., the world’s largest palm oil producer and a vital cog in Malaysian politics, gained 12 percent

  • Media companies: Utusan Melayu (M) Bhd., Media Prima Bhd. and Star Media Group Bhd. all slid. Utusan and Star Media are owned by United Malays National Organisation and the Malaysian Chinese Association. Media Prima’s group managing director Kamal Khalid previously ran the communications unit in the Prime Minister’s office

  • Destini Bhd. tumbled 41 percent. The defense services contractor is owned by Rozabil Rozamujib Abdul Rahman, a member of the United Malays National Organisation, a party in the outgoing ruling coalition

  • KUB Malaysia Bhd. dropped 20 percent: Majority shareholder Anchorscape Sdn Bhd.’s director Abdul Rahman Mohd Redza is the incumbent state assemblyman who won the Linggi seat in the state of Negeri Sembilan.

As Bloomberg reports, while there may be turmoil yet to come, including concerns about a potential widening in Malaysia’s fiscal deficit under the unprecedented coalition that’s taken office, for now, many investors are giving Dr Mahathir some space. After all, the country has solid fundamentals — its current-account surplus and 5%-plus growth rates are the envy of many an emerging market — and he’s tapped seasoned officials for senior economic roles.

“Markets are taking this in stride,” said Richard Jerram, chief economist at Bank of Singapore Ltd. “On Thursday, people were fairly concerned, but since then they’ve made some appointments and this advisory panel of grey beards they’ve put together has given some reassurance. The incoming finance minister has a pretty solid track record.”


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