Mahathir Win Has Morgan Stanley Seeing Malaysia Stock Volatility

(Bloomberg) -- Malaysia’s stock market will become more volatile after Mahathir Mohamad won a stunning victory in the nation’s elections, ending Najib Razak’s rule.

“We cannot rule out this raises the interest level for foreign investors (typically underweight the market) anticipating change,” analyst Aarti Shah wrote in a note. Foreign investors have already been piling into the Malaysian stock market ahead of elections with over $600 million in flows, according to Bloomberg data.

After hitting a record high in April amid an increase in foreign inflow, Malaysia’s benchmark FTSE Bursa Malaysia KLCI has gained 2.8 percent this year.

The iShares MSCI Malaysia ETF, known as EWM, dropped 6 percent to $32.42, the lowest since December, as trading volume jumped. The NEXT FUNDS FTSE Bursa Malaysia KLCI ETF incorporated in Japan fell 2.1 percent.

To contact the reporter on this story: Divya Balji in Singapore at dbalji1@bloomberg.net.

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Naoto Hosoda

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