Stocks, ringgit slip as political tension weighs

Local stocks stumbled on Monday as political uncertainty in the country grew after the Yang di-Pertuan Agong rejected a request by Prime Minister Muhyiddin Yassin to declare a state of emergency in response to the coronavirus crisis.

Broader Asian stocks and currencies were subdued, as a surge in coronavirus cases in the United States and Europe threatened hopes for a global economic recovery, adding to uncertainty posed by the looming US presidential election.

The Agong's rejection on Sunday of the request for the emergency is a major setback for Muhyiddin, who is facing a leadership challenge from opposition leader Anwar Ibrahim as well as infighting within his ruling coalition.

The king's rejection has arguably spared the country a deeper political and consequent economic crisis, analysts at Mizuho wrote, noting that the emergency request could be construed as a backdoor for the prime minister to retain control.

"The real danger is that a state of emergency, if construed as an undemocratic tool to out-manoeuvre, will inadvertently exacerbate the PM's political woes, potentially plunging Malaysia into deeper political uncertainty."

The ringgit shed more than 0.2 percent against the dollar to stand at a near four-week low, extending losses of around 0.3 percent sustained on Friday after talk of the state of emergency request first surfaced.

The FBM KLCI index slipped 0.8 percent to its lowest since Sept 11, with glove maker Top Glove Corp the biggest loser, down 2.5 percent.

Malaysia has seen a resurgence in coronavirus cases recently, just as businesses and workers try to recover from the economic blow of pandemic-led lockdowns.

- Reuters