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World’s longest bull run set to end amid Malaysia power upheaval

An investor walks in front of stock trading boards at a private stock market gallery in Kuala Lumpur, Malaysia, Thursday, May 2, 2019. (PHOTO: AP Photo/Annice Lyn)

By Yudith Ho, Abhishek Vishnoi and Liau Y-Sing

(Bloomberg) -- The world’s longest stock-market bull run is set to end its 12-year reign as political turmoil helped push Malaysian equities down more than 20% from their peak.

The FTSE Bursa Malaysia KLCI Index accelerated losses this afternoon to fall 2.8% as of 3 p.m. in Kuala Lumpur, extending the drop from its April 2018 all-time high to 21.5%. The benchmark had been in a bull run since 2008, rebounding from the global financial crisis to weather the European sovereign debt crisis, the U.S.-China trade war and Malaysia’s first change of government since independence.

In the end, a sell-off triggered by the abrupt resignation of Malaysian Prime Minister Mahathir Mohamad to the king and the coronavirus outbreak have finally pushed the index toward bear territory. The prospects of Malaysia’s growth continuing to slow from a decade-low has also pressured the stock gauge this year, after a 6% fall in 2019, which was the worst performance by a major Asian stock market.

Mahathir’s party exited the ruling coalition, throwing the Southeast Asian nation into fresh turmoil after infighting over his successor came to a head. Mahathir’s supporters had been reportedly maneuvering to form a new government that would exclude Anwar Ibrahim, the man positioned to be his successor.

“Given the many possible political configurations at this junction, investors should be watching events cautiously for now,” said Chang Wei Liang, a macro strategist at DBS Group Holdings Ltd. in Singapore. “It is too early jump to any conclusions, and we would have to wait and see. USD/MYR stability will be an important policy objective during this period.”

The ringgit weakened as much as 0.9% to 4.2271 per dollar, lowest since September. Bonds fell across the curve.

The nation’s largest stocks were among the biggest drag on the index Monday, with MISC Bhd, Sime Darby Bhd, and RHB Bank Bhd. each falling at least 4.5%.

© 2020 Bloomberg L.P.