Malaysia Election Review: Votes Of No Confidence

Malaysia's political landscape was dramatically transformed Sunday after the government slumped to its worst ever election results, losing its two-thirds majority and five states to a buoyant opposition. The coalition has effectively ruled Malaysia since independence in 1957. The coalition ended up with 62 percent of federal seats, down from 90 percent previously.

Indeed a clear message from fellow Malaysians in their quests for change and reformation. This result effectively will put a dent on the Government's future plans and policies, but worst of all, it could seriously affect the country's political stability as question marks being raised against the current leadership.

However, a stronger opposition's presence may not necessary be a bad thing, as there should now be much better check and balance than ever before!

From an investment perspective, any potential political uncertainty may not augur well for investors particularly for foreign investors. Thus, i expect some knee jerk reaction on the coming Monday's stock market opening.

However, fundamentally i do not foresee major changes as status quo should remain. Economically Malaysia is still in a relative strong position boosted by a strong domestic-driven market and major infrastructure projects coming from the 9th Malaysia Plan. The economy should be able to cushion off any downside from sluggish exports due to global economic slowdown led by a potential US recession and financial crisis. For the record, Malaysia's GDP grew at a strong 6.3% in 2007 and should maintain at around 6% in 2008.

Nevertheless, the risk to the above assumption is that projects slated to be implemented in states where opposition parties have taken over may face potential challenges or at the very least, reviewed.

What's your view on Malaysia after the general election? Any feedback is welcome.