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World’s longest bull run set to end amid Malaysia power upheaval

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The world's longest bull run is set to end its 12-year reign as political upheaval has helped push Malaysian stocks down more than 20 per cent from their peak.

[KUALA LUMPUR] The world's longest bull run is set to end its 12-year reign as political upheaval has helped push Malaysian stocks down more than 20 per cent from their peak.

The FTSE Bursa Malaysia KLCI Index was down 2.5 per cent as at the 12.30pm break in Kuala Lumpur, extending the drop from its April 2018 all-time high to 21 per cent. The benchmark had been in a bull run since 2008, rebounding from the global financial crisis to weather the European sovereign debt crisis, the US-China trade war and Malaysia's first change of government since independence.

In the end, concerns over whether Prime Minister Mahathir Mohamad will overhaul his ruling coalition coupled with global worries over the coronavirus outbreak have finally pushed the index towards bear territory. The prospects of Malaysia's growth continuing to slow from a decade-low has also pressured the stock gauge this year, after a 6 per cent fall in 2019, which was the worst performance by a major Asian stock market.

Dr Mahathir's supporters are reportedly maneuvering to form a new government that will exclude Anwar Ibrahim, the man positioned to be his successor. Mr Anwar is set to meet with Malaysia's king, who's usually consulted before major political changes, on Monday. That's after leaders of parties belonging to the ruling and opposition coalitions met the ruler on Sunday, spurring questions of whether they would form a new alliance that would shut out Mr Anwar.

"The only thing which is certain is that there is a lot of uncertainty," said Danny Wong Teck Meng, chief executive officer at Areca Capital Sdn. "It will weaken the investor sentiment. It will make valuations and earnings worse amid the virus outbreak."

The nation's largest stocks were among the biggest drag on the index Monday, with Public Bank Bhd, Tenaga Nasional Bhd and CIMB Group Holdings Bhd each falling at least 3.3 per cent.

Areca's Mr Wong recommends shifting to defensive stocks, including banks, real-estate investment trusts and consumer staples.

BLOOMBERG