Malaysian currency_ stocks slide as vote ends in hung parliament

Malaysia s stock market and currency slides after a national election produced the Southeast Asian nation s first hung parliament in history_ setting off a scramble to form a coalition before a Monday afternoon deadline.

The Malaysian ringgit fell almost 0.8% against the US dollar in early trading on Monday before recovering to be down 0.1% as markets weighed the possibility of an extended period of political instability.

Kuala Lumpur s benchmark index fell as much as 1.5%.

 The hung parliament was largely expected but is still viewed as negative in the short term as it means that they will once again have to cobble a coalition to rule_ Trinh Nguyen_ a senior economist for Asia at Natixis in Hong Kong_ told Al Jazeera.

 In other words_ politics takes precedence above all else_ and it s still unclear who will triumph and to what extent they can push through the mandates. Key issues like fiscal consolidation will be challenging as there is a political deadlock. We expect investors to hold off on investment until there is more certainty regarding politics and policy direction.

Malaysia s national election on Saturday failed to produce a clear winner_ with neither the Pakatan Harapan (PH) nor Perikatan Nasional (PN) coalitions securing the required 112 seats to form the government.

PH_ led by opposition Anwar Ibrahim_ won 82 seats_ while PN_ led by former Prime Minister Muhyiddin Yassin_ secured 73 seats.

Both Anwar Ibrahim and Muhyiddin have claimed to have enough support among legislators to form a new government.

Malaysia s King Sultan Abdullah Sultan Ahmad Shah has given politicians a deadline of 2pm (06:00 GMT) on Monday to notify the palace of their preferred government.

Malaysia_ an ethnically-diverse nation made up of a Malay majority along with significant communities of ethnic Chinese and Indians_ has been gripped by political instability since PH won a historic victory in the 2018 election_ ending the 60-year rule of the Barisan Nasional coalition.

PH collapsed amid political infighting in February 2020_ resulting in the appointment of Muhyiddin as prime minister. Muhyiddin was himself pushed out a little over a year later and replaced with BN s Ismail Sabri.

Southeast Asia s fourth-largest economy has bounced back strongly from the COVID-19 pandemic after suffering its biggest contraction since the 1998 Asian financial crisis.

Gross domestic product (GDP) surged 14.2 percent during the July-September period_ after growing 8.9 percent during the second quarter.