This article first appeared in The Edge Malaysia Weekly on November 25, 2019 - December 1, 2019

The FBM KLCI is down 5.54% year to date as at last Friday and on course to end the year at a multi-year low, barring a surprise rally before Dec 31.

It is not difficult to see why the local benchmark is struggling. Investors derive confidence from stability and continuity.  But such certainty is scarce in Malaysia Baru.

Just last week, renewed fractures appeared in PKR, the biggest party in the ruling PH coalition. And more than 1½ years after GE14, there is still speculation about the promised transfer of power. Multiple reaffirmations have failed to convince the public and rumours abound on how alliances are still shifting in a numbers game to control parliament.

PH’s loss in the Tanjung Piai by-election is a resounding message that the rakyat is weary of its antics since taking power last year.

It is worth noting that a big number of FBM KLCI constituents are government-linked companies that are much affected by major public policy changes, such as a clear succession plan.

So, it is easy to understand why foreign investors hesitate to come in. Even the stock market in Hong Kong — which is experiencing unprecedented public dissent — is doing better because it is far more detached from political uncertainties.

This is where PH has to get its act together quickly. The current political uncertainty, especially over the question of succession, is causing Malaysia to lose out.

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