Newsflash | Muhyiddin Resigns as Prime Minister
17 August 2021
PM Signs Off

Swirling rumours surrounding the resignation of Prime Minister Tan Sri Muhyiddin Yassin was confirmed this week after he lost the majority support of MPs in the Perikatan Nasional (PN) coalition. In a press conference, Muhyiddin announced his resignation as the country’s 8th Prime Minister less than 18 months into his tenure.

However, he will stay on as caretaker Prime Minister until a successor is appointed. In a Palace statement, the Yang di-Pertuan Agong in consultation with the Election Commission concluded that a general election would not be advisable due to the pandemic situation.

What Happens Now?

The PM’s resignation both lengthens and increases uncertainty as the eventual coalition formed can create policy delay, changes as well as the coalition being unstable itself.

This might or not might not be clarified soon, therefore we need to keep reassessing new developments to adjust our views and strategy accordingly.

We think the least negative impact to the market in increasing order is:-

  • Continuation of the current administration either under Deputy Prime Minister Datuk Seri Ismail Sabri or even Tan Sri Muhyiddin Yassin as the party could have the largest minority coalition
  • Barisan National
  • Pakatan Harapan - If history repeats itself, the coalition represents the most policy and personnel changes during its tenure
  • A unity or bipartisan government – As it is unprecedented, its impact on market can be harder to evaluate at this point.

Whatever coalition that wrest control of Parliament will benefit from the vaccination work done and reap the benefits of economic reopening, as well as less selling pressure by government-linked investment companies (GLICs) from the expiry of the various withdrawal schemes.

How Are We Positioning?

For conventional funds, coming from a heavily invested level, we believe reducing some weights for cash optionality is prudent in this environment. Shariah funds have higher cash levels going into this crisis due to less reopening play options and significantly weaker market vs conventional.

Technology, retail, healthcare, and manufacturing sectors offer the least political risk although not from a valuation perspective.

Banks, government linked companies and politically linked stocks are at risk now due to potential for more national duty given the limitation of our fiscal and monetary policies to stimulate the economy. This is a risk and not an eventuality, as a new coalition might not go down this route or it might not be necessary if the economy opens with pent up private sector consumption.

If politics can stabilise combined with economic reopening, there is potential for a 5%-10% bounce towards the year end. We favour:
a. Reopening plays like banks, retail, property, healthcare
b. Global growth plays like technology, manufacturing
c. Digitalization theme like telco, payment companies

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Managing Director
Teng Chee Wai is the founder of Affin Hwang Asset Management Berhad (Affin Hwang AM). Over the past decade, he has built the Company to be the fastest growing and only independent investment management house in Malaysia’s top three, with an excess of RM47 billion in assets under management as at 31 December 2018.​

​In his capacity as Managing Director / Executive Director, Teng manages the overall business and strategic direction as well as the management of the investment team. His hands-on approach sees him actively involved in investments, product development and marketing. Teng’s critical leadership and regular participation in reviewing and assessing strategies and performance has been pivotal in allowing the Company to successfully navigate the economically turbulent decade.

Teng’s investment management experience spans more than 20 years, and his key area of expertise is in managing absolute return mandates for insurance assets and investment-linked funds in both Singapore and Malaysia. Prior to his current appointments, he was the Assistant General Manager (Investment) of Overseas Assurance Corporation (OAC) and was responsible for the investment function of the Group Overseas Assurance Corporation Ltd.​

​Teng began his career in the financial industry as an Investment Manager with NTUC Income, Singapore. He is a Bachelor of Science graduate from the National University of Singapore and has a Post-Graduate Diploma in Actuarial Studies from City University in London.
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