Malaysian stock market trading activity weakens as Saturday's voting day looms。Stock market poses downside risks as uncertainty over the outcome of Malaysia's 15th General Election (GE15)。In the past, buying interest in politically-related stocks often appeared before elections。However, with the largest number of 945 candidates in Malaysian history competing for 222 parliamentary seats, there is no clear winner for the upcoming election.。

In the last election, the Alliance of Hope (PH) succeeded in waging the biggest political upheaval in Malaysia's electoral history, defeating the National Front (BN) coalition.。And this time, there are three major coalitions involved, the National Front, the National League and the League of Hope.。In addition, there is another Malay coalition - the Land Patriots (GTA) led by one of Malaysia's longest and oldest prime ministers, Tun Mahathir Mohammad.。If you're confused about different alliances, you're not the only one。

Fragmentation and a murky political landscape remain a downside risk for investors, as national development prospects could be vastly different under five likely candidates for prime minister.。Given that the election age has been lowered to 18 from the previous 21, the general election result may bring more surprises。

Biggest risk: No single party can form a majority to govern

In the past, investors would look at election results to determine whether conservatives or progressives would win the election.。Factors such as good governance, the fight against corruption and investment-friendly policies are the focus of investors.。However, most investors, including me, are more worried about the outcome that could lead to a hung parliament - that is, no single coalition can form a majority party to govern.。This result will bring more uncertainty than before GE15, as negotiations between different alliances will flood the market.。

Politically Linked Stocks Will See More Trading Activity

While market sentiment is still likely to be affected by a number of external risks, politically linked stocks are likely to see more trading activity once the election results are confirmed.。Some of these politically linked stocks include plantation company Matang Berhad, car leather seat maker Pecca Group Berhad and Malaysia's largest English-language media company, Star Media Group Bhd - owned through the Malaysian Chinese Association (MCA), which is part of the National Front.。

MCA has 17 in Matang.15% stake and holds Pecca Group 6 through its investment arm, Huaren Holdings Sdn Bhd..33% of indirect shares。MCA directly holds Star Media 43.23% stake, indirectly holding 0.675% of the shares。Another media company associated with the National Front is Media Prima Bhd, which has links to Datuk Seri Johari Abdul Ghani, a National Front politician and former second finance minister。

In addition, property developer Jiankun International Berhad is also considered a National Front unit, as the son-in-law of former deputy prime minister and current chairman of the Malayan National Unity Organization (UMNO) Datuk Seri Ahmad Zahid Hamidi Datuk Saiful Nizam Mohd Yusoff owns 8.58% equity。During GE14 in 2018, we witnessed some sharp declines in National Front-related stocks in the first few days after the market changed government for the first time after the election.。

Politics to play prominent role in Malaysian stock market recovery

Overall, Malaysia's stock market has lagged behind its peers over the past five years, including the Singapore market, amid political uncertainty and revelations of corruption such as the 1MDB scandal.。Recall that while Malaysia saw its first change of government in the 2018 GE14 election, the PH coalition lasted only two years, with political infighting leading to a shift in the coalition.。

In the last four years, this has led to three different prime ministers, namely, Dunmahathir Mohammad, Dansri Muhiddin Yassin and also the current acting prime minister, Dansri Ismaishabi Yakob。Will GE15 change the previous narrative？Investors won't have to wait too long to find out, but regardless of the outcome, expect to see some increased trading activity on Monday.。