The victory of Islamic Party in Malaysia lowers prices for alcohol and gambling stocks - TopForex.Trade

The victory of Islamic Party in Malaysia lowers prices for alcohol and gambling stocks

Gambling and alcohol-related stocks tumbled in Malaysia after the Islamic Party won a majority of seats in the country’s elections, paving the way for the alliance it is part of to form the next government.

The victory of Islamic Party in Malaysia lowers prices for alcohol and gambling stocks

Stocks in gambling and alcohol companies fell in Malaysia after the Islamic Party won the majority of seats in the country’s elections, paving the way for the alliance it is part of to form the next government.

Stocks of casino and resort company Genting Malaysia Bhd. fell 11%, the most significant drop in more than two years, amid a broader sell-off in the country’s shares. Its parent company, Genting Bhd. fell by 10% and lottery equipment supplier Sports Toto Bhd. was at its lowest since 1993. Brewers including Heineken Malaysia Bhd. and Carlsberg Brewery Malaysia Bhd. also declined.

The electorate gains The Se-Malaysia Islam Party, or PAS could undermine trader investor confidence, as the party has previously called for strict Sharia law in the country. The party, which won 49 out of 220 parliamentary seats, is part of the Perikatan National Alliance, led by former Prime Minister Muhyiddin Yassin, which is fighting opposition veteran Anwar Ibrahim’s multi-ethnic Pakatan Harapan to form a government.

 

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PAS, as the largest party, will control most of the policy development and policy outcomes of the new government, if they are part of it.

The government, led by Islamists, usually tries to turn a pre-existing democracy into an illiberal one, which would be very difficult for Malaysia.

The benchmark KLCI fell 1.5% amid a broader decline in the region, while the ringgit fell 0.2% against the dollar.

Traders and investors expect more scrutiny of such companies if the bloc led by Mukhiddin comes to power, given the previous PAS measures on beer festivals and gambling.

The strong performance of the PN coalition in the elections came as a surprise and regulatory risks are expected to increase, especially for the gambling, brewing, and tobacco sectors.

Malaysia’s parliament was hung for the first time in Saturday’s elections after none of the three major coalitions won enough seats to form a majority. Muhyiddin and his rival Anwar clashed in a battle to get enough votes to form a government. They have until 2 pm. On Monday to strengthen alliances and nominate Prime Minister.

 

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