KUALA LUMPUR (May 11): As the outcome of the 14th general election (GE14) is unprecedented and unexpected, Maybank Investment Bank (Maybank IB) Research expects some sell-off in Malaysian equities after the market returns from its short break on Monday.

Maybank IB Research said this is because investors do not like uncertainties.

"From a technical perspective, the FBM KLCI's uptrend remains intact, but we expect a short-term negative knee-jerk reaction.

"That said, we draw comfort that at the time of our writing of this report, Tun Dr Mahathir Mohamad has sworn in as the country's seventh prime minister and he has also named 10 core ministries, with a Pakatan Harapan (PH) presidential council meeting to convene tomorrow (May 12) to discuss the new Cabinet line-up," it said in a report today.

"This is positive as it shows that the new government acknowledges the urgency to get down to business immediately," the research firm added.

Maybank IB Research said it also draws comfort that Dr Mahathir, leaders of PH and their high-level supporters are "extremely experienced leaders" having been senior members of the Cabinet and/or chief ministers.

The research firm is maintaining its 2018 gross domestic product (GDP) growth forecast of 5.3% for now, pending details on the PH government's economic policies, and ahead of the release of the real GDP for the first-quarter of 2018 on May 17.

"We are neutral to positive on the consumer spending growth outlook, based on Budget 2018 and PH's GE14 manifesto on measures to address living costs and boost disposable income. Main issue on the growth outlook now is investment, as businesses adopt a 'wait-and-see' stance and amid potential government reviews of several China-linked infrastructure projects and investments," it said.

Maybank IB Research highlighted that another key issue is the impact to government finances and hence, the risk to budget deficit and sovereign credit rating, from the various measures in PH's GE14 manifesto to alleviate living costs, that is, the goods and services tax and highway tolls abolition, fuel price subsidy/stabilisation, free education, and higher healthcare spending.

"Catalysts, in our view, are: the new PH Government providing greater clarity on the implementation and long-term target/direction of its economic policies, and highly respected competent names in the new Cabinet line-up," it said.

Still, the research firm does not expect the ongoing and planned major public transport infrastructure projects such as the Mass Rapid Transit 2 and 3, the Light Rail Transit 3 and the Pan Borneo Highway projects to be affected by the change in the government.

Maybank IB Research also noted that sectorally, the election result is positive on the consumer sector and sentiment-negative for the construction sector.