Malaysian Stocks, Ringgit Crash As Opposition Wins Election

Update 2: Malaysia's Opposition Coalition wins a majority in the nation's election. The Ringgit is tumbling-er...

Mahathir Mohamad’s Pakatan Harapan coalition secures a majority in the Malaysian parliament, according to the election commission.

And here's why the currency is crumbling...

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.

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Update 1: Of the 152 seats tallied, BN has 63 and the opposition coalition 71, while PAS, a potential kingmaker, has 14.

And Malaysian stocks are collapsing...down 8% - the biggest drop in at least 2 1/2 years...

And the Ringgit is tumbling amid fears of capital controls...

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Unofficial results from Malaysia's general election Wednesday show the opposition alliance is making strong gains at the expense of the ruling coalition, and along with rumors of the Malaysian Army's deployment, the Ringgit has tumbled into the red for 2018...

Results are in for 57 out of 222 seats -- Prime Minister Najib Razak's Barisan Nasional has won 30, with the opposition alliance taking 23

As AP reports, in the federal election, Prime Minister Najib Razak's National Front is lagging behind the opposition, which campaigned on a platform of saving Malaysia from a corrupt elite after a multibillion-dollar corruption scandal at a state investment fund set up by Najib.

At least two Cabinet ministers appear to have lost their parliamentary seats and the opposition also made gains in state contests, potentially threatening the grip of Najib's party on Johor state, where it was founded, and other states.

"There is a massive swing across races. It's a big shift. This is a repudiation of Najib's government from all walks of life from the very rural northern states to the more industrial southern coast," said Bridget Welsh, a Southeast Asia expert at John Cabot University in Rome.

Angered by the graft scandal, Mahathir, who was prime minister for 22 years until 2003, emerged from political retirement and joined the opposition in an attempt to oust Najib, his former protege.

Bloomberg reports that Malaysia's chairman of the opposition coalition Mahathir says he believes Prime Minister Najib is unable to win based on the opposition's own quick vote count. He tells supporters he thinks his alliance will secure the 112 seats needed for a majority, and take five states.

“From our official count, they are not forming government."

If Mahathir is right, he'd be returning to office at the age of 92. For now, though, the official tally from the Election Commission stands at 44 seats counted.

Additionally, pictures began to circulate showing the Malaysia army being deployed - which spooked markets - but the military swiftly denied these "rumors circulating on social media that army assets and personnel have been stationed to control Putrajaya," according to an official statement from armed forces late Wednesday.

The statement urged the public to immediately stop circulating the pictures.

 

And along with the rest of the EM FX market, the Ringgit (1mo NDFs in this case) is plunging...This is the biggest drop in the Ringgit since Nov 2016 (Trump election)

Here's why the currency is plunging... 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.

Additionally, MSCI Malaysia ETF is tumbling...

Comments

Ghost of PartysOver saldulilem Wed, 05/09/2018 - 12:19 Permalink

So the Entitled Ruling Party lost an election.  Bring on the military to restore the Political Class.  Not much different than the Entitlement Political Class bringing on Team Mueller, The Useful Idiots.  And if you did not think Murica was heading towards the like of third world countries then you are not paying attention.   Hopefully The Don will patch the holes below the water line.  Ship be sinking.

In reply to by saldulilem

KimAsa Wed, 05/09/2018 - 12:32 Permalink

Any/all foreign or EM currency used to borrow in USD is going down sharply as the 10-year US treasury yield rises.  Breached 3% again today.  Payback is a bitch.  Literally.  

Pernicious Gol… Wed, 05/09/2018 - 12:36 Permalink

Years ago Mahathir addressed the UN General Assembly, broadcast live. It was on the TV in the lunch room at work. He said, in an angry voice, "Jews run the world!" An older Jewish co-worker of mine, remarried to a decades-younger Thai lady, said out loud, "He hasn't been to my house."

Zen Xenu Wed, 05/09/2018 - 13:52 Permalink

Yep, I'm an expat in Malaysia. It's almost 2am.  Ruling party refuses to admit defeat.

Government-controlled TV still insists the ruling coalition is winning.

Damn quiet outside.

Everyone waiting to see if the ruling government will step down... or if tanks, guns and military will sieze the day tomorrow.

And I'm waiting to see if the internet will be shut down tomorrow.

Oh, hey, here's one of my favorite old ZH articles applicable to today:

https://www.zerohedge.com/news/2017-08-15/preparing-zombie-apocalypse-l…

Parrotile Zen Xenu Wed, 05/09/2018 - 16:09 Permalink

Hope it doesn't get "too exciting" there - we're booked in to the ShangriLa Rasa in Penang in a fortnight! The Wife's already planned the various shopping expeditions (which will include their small but excellent Marks and Spencer in the Gurney Centre (great name . . . . !), and a trip up Penang Hill to see how the new building is progressing.

In reply to by Zen Xenu

Zen Xenu DrewJackson Wed, 05/09/2018 - 21:50 Permalink

Thankfully, everything seems peaceful this morning here in Malaysia.

Live reporting, from Independent Malaysia media:

LIVE: Malaysians wake to a new government

After battling through the mother of all polls, Pakatan Harapan emerges victorious in the battle for Malaysia.

In what is truly a reflection of the power of the people, Malaysians left a clear message for change at the polls, wresting federal control away from BN after 61 years.

This is the first time the nation will see a change of government since independence in 1957.

In reply to by DrewJackson

wwwww Wed, 05/09/2018 - 14:09 Permalink

"The statement urged the public to immediately stop circulating the pictures..."

Pay no attention to the man behind the curtain.

agcw86 Wed, 05/09/2018 - 16:09 Permalink

The fine people of Malaysia got rid of Najib the tyrant and Obama-style crook and got back a man who actually held a 9/11 world tribunal in 2014 that found GW Bush and Tony Blair guilty of war crimes. Dr. Muhammed also fought off Soros when he tried to destroy the Malaysian currency in the 1990's. If we had leaders with guts like that, we would not be in the mess we are in.

squid Wed, 05/09/2018 - 19:03 Permalink

He's back......

Dr. M is back in town and Najib is gone.

Well? Malaysia finally got their vaunted middle class which has told to corrupt elites to FUCK-OFF!

 

And you were wondering why the banking (read jewish) elites in the west are systematically dismantelling the middle class? This is why.

 

squid