The stock market is down and experts say it is the adverse reaction of the equities after the fallout from the stalemate GE15.
As the dust of the 15th General Elections (GE15) settled, Malaysia is left with a hung parliament, as expected by many political observers.
Worst still, the parties that won the most seats are not able to put a coalition together to form the new government. But they have until 2 pm today to present a new coalition to the King.
Anwar Ibrahim is in meetings with the Barisan Nasional this morning and there are talks they have ironed a deal to form a new government with Anwar as PM.
Meanwhile, TS Muhyiddin Yassin is also in talks ouith several parties, mainly from Sabah and Sarawak on their support for him to take over as PM.
The GE15 provided a few surprising results. Perikatan Nasional (PN) won 73 seats, while Pakatan Harapan (PH) won 82 seats, forming the two biggest blocs in parliament and a chance to form the Federal Government.
Meanwhile, Barisan Nasional ended with 30 seats potentially playing a kingmaker role.
"As we expected, there will have to be a coalition of coalitions given the hung parliament situation. Gabungan Parti Sarawak (GPS) and Gabungan Rakyat Sabah (GPS) have thrown its support with PN.
"It is unclear where BN stands as its 30 seats will be able to give either PH a slim majority (112 seats) or a strong majority for PN-GPS-GRS (131 seats). All will be decided at 2pm today when the coalitions will have to submit their stands.
"In the meantime, we expect the equity market to react adversely to this situation with a negative kneejerk reaction pulling the FBM KLCI lower and possibly breaching its psychological support level of 1,400 points," says the MIDF.
However, once a new government is formed, the market is expected to duly recover
"Our baseline assumption is for PN to form a majority government together with GPS, GRS and also BN in short order. At this juncture, we are keeping our FBM KLCI 2022 year-end target at 1,520 points."