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What happens to the KLCI when General Election is announced?

Publish date: Sun, 16 Oct 2022, 02:37 PM
Unique content created once in a blue moon to increase the quality of articles of klse.i3investor.com. (used to be weekly)

On 10 Oct 2022, 9th Prime Minister Dato Sri Ismail Sabri Yaakob announced the dissolution of Parliament and called for a snap election. 

​The Malaysian General Election is coming soon. What might happen to KLCI?

1. According to 陈剑老师投资教育频道 at (https://www.youtube.com/watch?v=bAepK1-VOo8):

2008 election: KLCI started going down before polling/election date. After election, KLCI dropped even more, -9.5% date. (Refer 7.55 of vid) Reason is Mr. Market didn't expect Opposition to win so many seats, showing Government is not that strong. But KLCI gradually recovered after that.

2013 election: KLCI went up before polling date. After election, KLCI rose high but closed low. There is growing uncertainty of the Government's stability. 

2018 election: KLCI was sideways before polling date. After election, Bursa Malaysia closed KLSE for 2 days due to special holiday announced by Chief Secretary to stabilise Mr. Market's emotions to prevent a drastic plunge. When KLSE reopened, KLCI opened low, closed high, but started its bear market downtrend for the next few years. 

陈剑's views are not to partake in election theme stocks, EDEN for example, as the fluctuations are high and chance of losing money is high. 

Comments: I agree with him on this. 

2. According to Faridah Najuna Misman , Shashazrina Roslan & Muhammad Izzat Mat Aladin  in their research in General Election and Stock Market Performance: A Malaysian Case 

(Source: https://www.researchgate.net/publication/342568278_General_Election_and_Stock_Market_Performance_A_Malaysian_Case/fulltext/5efb7c38a6fdcc4ca43dfcca/General-Election-and-Stock-Market-Performance-A-Malaysian-Case.pdf):

KLCI went down in 2004, 2008, 2018  after polling, whether 15, 30 or 60 days. 

KLCI went up  in 1999 & 2013  after polling day, whether 15, 30 or 60 days. (Figure 1 at page 142 in the Journal)

They pointed out that, despite Barisan Nasional's spectacular victory, KLCI in 2004 went down.

Comments: I guess that in 2022, an even number year, KLCI would fall after election? Of course, it's not so simple as that. But, I agree that the Opposition winning the GE 14, led Mr. Market to a shock of political instability and foreign investors went on a sell-off of stocks. 

3. This chart is obtained from CF Lieu's website at  (https://howtofinancemoney.com/malaysia-13th-general-election-stockmarket ):

Comments: Appreciate this rare table, but it seems that Barisan Nasional winning the election has not much effect on KLSE after polling date, as Barisan Nasional has always won 2/3 majority until 2008. 

4. This is from The Star & Kenanga Research (https://www.thestar.com.my/business/business-news/2022/10/11/clearing-up-uncertainty)

Comments: Pretty self-explanatory, it shows that KLCI generally went up after dissolution of Parliament until polling date.  But I think what happened to KLCI after the polling date is more important. 


Coined as "The Mother of All Elections", this GE is the most important one yet. 

Some feel that Opposition winning the GE may have the same effect as 2018 on KLCI. 

Some think that Barisan Nasional winning the GE would have stabilising effect on KLCI.

Ultimately, for KLCI to be stronger, a better government is required. 

A better government, needs better politicians chosen by the voters. 

Go and cast your votes for quality politicians, for a better Malaysia, and a higher KLCI. 

Disclaimer: This article is not tailored financial advice, but mere general stock sharing / observations. Please do further due diligence.

Be the first to like this. Showing 6 of 6 comments


We will have both US midterm erection and Malaysia GE at the same time! If Harapan voters don't turn up full force, then we will have taliban government in place! Dont blame each other by then!

2022-10-16 14:55


Post removed.Why?

2022-10-16 15:01


GE15 will be held sooner than we expected! The thing is, post GE15 will be either bad or worst! Really, Harapan leaders are like headless elephants! While BN is non existent, we have 3 major malay parties having friendly fire!

2022-10-16 15:14


Please give us an uptrend KLCI. Thank you.

2022-10-17 12:41


It's like a usual day, nothing will happen. Of coz if the current government is toppled, those mumno-related companies may go down a bit. But people already realize, whatever party goes into power, they'll still take care of the economical issues, those remarks racists made by politicians won't work to mature investors, only a portion of uneducated folks are still buying these types of threats. So some political parties don't want their folks to be educated, and don't want their states to prosper, so they could keep hiding the folks from learning the truths. Apart from that, a few fund institutions may throw their dissatisfaction with a government (these fund operators usually have some relationships with the 60+ years government) by selling stocks, but the downtrend is very temporary, after a week or so it'll go back to normal. All in all, nothing severe will happen, whatever happens in the election.

2022-10-17 13:08


Thanks for your article.

2022-10-18 23:57

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