Investors To Stay Away Until Stable Govt Formed Says Fitch Solutions

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Fitch Solutions Country Risk and Industry Research has warned of a loss in investor confidence unless a stable government is formed soon.
(FMT) – Noting that neither of the two major coalitions won an outright majority in Saturday’s polls, it said it was unclear whether Pakatan Harapan or Perikatan Nasional has the support of at least 112 MPs necessary to establish a simple majority, as negotiations between various parties are ongoing.
“We will likely be raising Malaysia’s short-term political risk index score over the coming days once the new government is formed, and when there is greater clarity with regards to policy direction,” the research arm of US credit rating agency Fitch Solutions said.
“However, if a new, stable government is not formed over the coming weeks, it could lead to greater uncertainty and weigh on our growth forecast of 5.8% in Q422 and 4.0% in 2023 as investors take a wait and see approach.
“We reiterate our expectation for political stability to return in Malaysia, once the new government is formed, reinforced by the anti-party hopping bill, which was passed in July and effective Oct 5.”
It said the law should prevent a collapse of the new government due to party defections, and should also lead to an improvement in the policymaking process, reducing the need for the next ruling government to seek support from smaller parties in order to prevent defections.
PH won 82 seats in GE15, and an alliance of PH and Barisan Nasional (30 seats) would give the coalition a simple majority of 112 seats, or 141 if Gabungan Parti Sarawak (23 seats) and Gabungan Rakyat Sabah (six) were included.
PH chairman Anwar Ibrahim has confirmed that PH and BN are in negotiations to form the government.
PN won 73 seats, 39 short of a simple majority. An alliance of PN, BN, GPS and GRS would give the four blocs a total of 132 seats. PN insists it has the support of 112 MPs and claimed it submitted 112 statutory declarations to the King yesterday.
The Yang di-Pertuan Agong, Sultan Abdullah Sultan Ahmad Shah, has given party leaders and heads of coalitions until 2pm today to propose their prime ministerial candidates.

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