Malaysian stocks fell to a two-month low and a gauge of price swings climbed to an 11-month high on speculation the government will dissolve parliament after the Lunar New Year for an election.
The FTSE Bursa Malaysia KLCI Index lost 1.2 percent to 1,614.14, its lowest close since Dec. 5. It was the worst performer among benchmark indexes in Asia today. The KLCI’s 50-day volatility rose to 9.13, the highest level since Feb. 21. Volumes were 44 percent above the 30-day average, according to data compiled by Bloomberg. UEM Land Holdings Bhd. sank 7.4 percent, leading declines in the stock gauge.
“My peers have received text messages that said the parliament will be dissolved after Chinese New Year,” Bharat Joshi, who helps oversee the equivalent of $1.7 billion at Aberdeen Asset Management Sdn. in Kuala Lumpur, said by phone. “Sentiment is poor, investors are being cautious.”
The KLCI index, the world’s second-worst performer among benchmark indexes this year, has fallen 4.7 percent since hitting a record high on Jan. 7. Political risks heightened amid speculation the general election may result in the ruling coalition losing seats.
Prime Minister Najib Razak, who must dissolve parliament by April 28, couldn’t comment on the election timing, a government spokeswoman said today. The Lunar New Year starts from Feb. 10.
Najib said in December the Barisan Nasional or National Front coalition, which has ruled the nation for 55 years, aims to restore a two-thirds parliamentary majority it lost in 2008. At stake are programs Najib unveiled to boost economic growth, such as a $444 billion program of private sector-led projects announced in 2010.
His approval rating fell to the lowest level in 16 months in December, the Merdeka Center for Opinion Research said in a statement on Jan. 10.
“Most people expect elections to be called post the Lunar New Year and be held between the third week of March and second week of April,” according to a note by Barclays Plc dated Feb. 1. “Even though an election has been anticipated for a while, domestic asset managers are reacting cautiously as the likely dates approach, and expect volatility to persist.”
The KLCI trades at 14.4 times estimated earnings, the lowest level since May 28, according to data compiled by Bloomberg. That compares with the MSCI Emerging Markets Index’s multiple of 10.3 times.
UEM Land, the nation’s biggest property developer by market value, had its steepest decline since Sept. 26, 2011, while mobile-phone operator DiGi.Com Bhd. tumbled 5.3 percent, the most since Oct. 4, 2010. YTL Corp. slid 4.2 percent, while Genting Malaysia Bhd. dropped 3.5 percent.