The iShares MSCI Malaysia (EWM) fell over 3% Tuesday as investors grow more anxious over an upcoming general election and the potential impact on the economy.
Prime Minister Najib Razak over the weekend said he would soon announce a date for the election.
“The ruling Barisan Nasional coalition, already grappling with a slowing economy, faces its most difficult polls to date,” Channel NewsAsia reports.
“People are just taking the cash and running,” Bharat Joshi at Aberdeen Asset Management told Bloomberg News.
“There is always the overhang of political risk before the election,” added Alan Richardson, a fund manager for Samsung Asset Management. “There is uncertainty whether the ruling coalition would be able to at least maintain the existing majority they have.”
EWM, the Malaysia ETF, is up about 8% the past year. Tuesday’s sell-off pulled the fund below its 50-day moving average for the first time in a month, reports Trang Ho at Investor’s Business Daily. The decline was the ETF’s largest one-day drop since September 2011.
“Whenever there is speculation that Parliament will be dissolved, the market weakens,” said Credit Suisse research analysts in the report. “The quality of Prime Minister Najib Razaks’ win will be crucial, but the market feels hapless as the potential outcome of the general election is murky.”
iShares MSCI Malaysia
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