With capital markets having priced in a clear BN victory, we expect a kneejerk selloff when markets reopen, as the country risk premium spikes higher. We believe investors and foreign portfolio funds in particular, will choose to exit first, as there will likely be selling pressure on the MYR. Meanwhile, international rating agencies may need to be convinced that the incoming PH government has a viable and coherent economic strategy.

The construction sector could be vulnerable, if the viability of large projects is reassessed, while exporters could benefit from a weaker MYR. As global and domestic macro-economic fundamentals remain sound, we would look to accumulate quality non-politically aligned stocks at lower levels. MYR weakness would benefit export-oriented sectors like technology, timber, rubber products and furniture producers.