KUALA LUMPUR (May 14): The FBM KLCI is expected to trade range bound when the market resumes today after the long holiday following the 14th general election (GE14) and Pakatan Harapan (PH) sweeping into power.

Although the initial shock of the election result which saw the fall of the ruling Barisan Nasional coalition after six decades was expected to be a drag on the market, the manner in which incoming Prime Minister Tun Dr Mahathir Mohamad swiftly named a senior cabinet portfolios and a “council of elders”is likely to soothe investor sentiment within a brief period.

The U.S. dollar eased on Friday while an index of global stock performance gained and was poised for its best week since early March, as moderate inflation eased worries about a faster pace of U.S. interest rate hikes and boosted risk appetite, according to Reuters.

The dollar fell for a third day against a basket of major currencies as traders booked recent gains, which were tied to widening interest rate gaps in favor of the United States and signs of slower growth elsewhere in the world, it said.

On Wall Street, the Dow Jones Industrial Average rose 91.64 points, or 0.37 percent, to 24,831.17. The S&P 500 gained 4.65 points, or 0.17 percent, to 2,727.72 and the Nasdaq Composite dropped 2.09 points, or 0.03 percent, to 7,402.88, said Reuters.

Meanwhile. Affin Hwang Investment Bank Bhd said a negative impact on the market is likely over the near term, noting that the market and ringgit weakness, however, will only be temporary. 

Affin Hwang said the PH win in GE14 last Wednesday, came as a major surprise and will likely be a shock to the market, given that the change in ruling government is unprecedented.

"While we acknowledge the possibility of short-term capital outflows because of policy uncertainties, we firmly believe the newly-formed government
presents an opportunity, as it is comprised of a group of senior ministers with strong credibility," the research firm said in a report May 11.

Meanwhile, newly-appointed Finance Minister Lim Guan Eng yesterday said the brand new government has steady hands to handle the jitters that could affect the Malaysian stock market following Pakatan Harapan’s takeover of Putrajaya.

“We have steady hands handling this situation. The officers are in place and relevant briefings are being carried out,” Lim said.