Malaysia Stocks Rise as Full Lockdown Avoided to Allow Recovery

(Bloomberg) --

Malaysia’s stocks climbed from a three-month low after the government resisted imposing a full lockdown to avoid derailing a nascent recovery in the economy.

The FTSE Bursa Malaysia KLCI Index rose as much as 0.95% on Monday, snapping a three-day loss. Sime Darby Bhd. and Axiata Group Bhd. led gains in the gauge. The government shortened business working hours and cut public transport capacity to reduce movement, allowing factories and other businesses to operate.

The government is trying to strike a balance that will protect lives while ensuring that economic activity can continue, Prime Minister Muhyiddin Yassin said in an interview with state-owned RTM television on Sunday. Malaysia’s economy lost about 700 million ringgit ($169 million) a day when only essential sectors were allowed to operate in January.

“Life is important; I also don’t want the economy to collapse,” he said. “If the economy collapses, I may have to spend half a trillion now. That’s what we have learnt over time. We have to balance.”

Businesses will only be allowed to operate from 8 a.m until 8 p.m. daily from May 25, Defense Minister Ismail Sabri Yaakob said on Saturday. About 80% of government officers and 40% of private sector employees will work from home, with the move affecting 7 million to 8 million workers.

High-risk places will be shut immediately and usage of public transportation will be limited to 50% capacity, Ismail said.

Growing Risks

Finance Minister Tengku Zafrul Abdul Aziz estimated that the curbs could result in a 1% hit on the nation’s gross domestic product, according to a report from Bernama.

The Southeast Asian economy contracted for the fourth straight quarter in the first three months of the year, albeit at a slower pace. The government and the central bank expect the economy to grow 6% to 7.5% this year after a 5.6% contraction in 2020.

READ: Malaysian Markets Waver Amid Fears of Nationwide Lockdown

New cases in Malaysia neared 7,000 on Sunday, a fifth straight day that infections have remained above 6,000.

Zafrul on Saturday announced an additional allocation of 200 million ringgit ($48 million) for the Health Ministry to procure screening kits and personal protective equipment, The Star newspaper reported.

“We will see how long this crisis continues,” Zafrul was quoted as saying. “If there is a need, then we will have to look at supporting (the economy) from a very targeted approach to the industries that are most affected by the pandemic.”

Less than 3% of Malaysia’s population have been fully vaccinated. That tally trails neighbors such as Indonesia and Singapore, and puts Malaysia at risk of falling well short of its inoculation goals for the year, according to data compiled by Bloomberg.

The government has said the pace would accelerate from June with more supplies coming in from Pfizer, Sinovac and AstraZeneca.

“We have to stay safe and it’s safest to stay home and follow the SOPs,” Muhyiddin said. “We should all practice self-lockdown.”

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