Early election buzz grows but market impact remains unclear, says MBSB

 

SPECULATION OVER the possibility of an early general election has been circulating in the market since the beginning of the year, with recent media reports adding further momentum to the discussion.

According to reports and public statements, Prime Minister Datuk Seri Anwar Ibrahim is said to be weighing the option of calling a snap election during the Pakatan Harapan Convention 2026 scheduled for 17 May 2026.

A review of Malaysia’s parliamentary and electoral history suggests that early elections are far from uncommon.

Of the 14 parliamentary terms prior to the current administration, only three completed their full term or came close to doing so, indicating that dissolving Parliament ahead of schedule has often been part of the country’s  political landscape.

Looking at historical market data, MBSB Research (MBSB) believe general elections do not offer a consistent signal on whether market performance will be positive or negative.

Historical trends show that about 47% of previous general elections were accompanied by positive market performance in the lead-up to polling day. 

However, this should not be interpreted as evidence that the elections themselves were responsible for the gains.

Other factors (internal and external) may have had a bigger influence on the market performance.

For example, the market performance in the lead up to GE15 (in 2022) was influenced more on US Fed interest rate hiking cycle in our view.

“Our views are formed based on past historical data only, and we did not take into account other factors such as GDP growth, interest rate movements and more,” said MBSB.

Having said that, MBSB noted that the market did see positive performance during the GEs.

However, MBSB cannot conclude conclusively that the GEs have been one of the factors in this positive performance.

View based on statistical analysis of historical data. What is more interesting amongst our findings is that the market did see its peak performance during the observed period. 

This may suggest that in a given year of any GE, the market has the possibility of finding its peak, based on the frequency of this observation.

Nevertheless, this peak can be reached regardless of whether it is a GE year or not.

The conventional wisdom is that the local market would get excited with the mere mention of a general election. 

“However, based on our observation, the market performance prior to polling date have been rather mixed. For now, we expect external factors to continue to hold sway over equity market sentiment namely the Middle East conflict and its impact,” said MBSB. —Focus Malaysia