King's decision not to declare emergency a major relief to market - CGS-CIMB

 

The Yang di-Pertuan Agong Sultan Abdullah Sultan Ahmad Shah’s decision not to declare an emergency is a major relief to the market, CGS-CIMB said.

In a research note today, the stockbroking firm said an emergency declaration would shake consumers, businesses and investors’ confidence in the country, leading to lower growth prospects for the country and corporates.

It said the King’s decision would likely avert a potential major sell-off in the market arising from concerns over the negative impact that an emergency decree would have on the economy and corporate earnings.

“The King’s advice for members of parliament (MPs) to not continue with any irresponsible action that could undermine the stability of the current administration could quiet political noise in the near term, while his reminder of the importance of the Budget 2021, set to be tabled in the parliament (on Nov 6) reduces the chances of the budget being voted down due to insufficient support,” it said.

Overall, CGS-CIMB said the King’s decision is a more favourable outcome for the Malaysian equity market, but it might not be sufficient to reverse foreign investors’ net selling due to prevailing political uncertainty.

Hence, it maintained the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) target of 1,520 at year-end.

On Sunday, the palace released an official statement saying that there was no necessity for an emergency to be declared in the country.

Comptroller of the Royal Household of Istana Negara (National Palace) Ahmad Fadil Shamsuddin informed that the King made the decision after carefully studying the request presented by Prime Minister Muhyiddin Yassin and discussing it with the Malay Rulers, besides taking into account the current situation in the country.

- Bernama