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Political uncertainty hit stocks in Malaysia and Thailand


September 4, 2008

Political uncertainty hit stocks in Malaysia and Thailand
Malaysian stocks are likely to edge lower on Thursday, amid a lack of corporate news and growing political uncertainty ahead of the deadline set by
opposition leader Anwar Ibrahim to topple the government, reported Reuters.

"Investors still have the September 16 date in their minds, and they will probably wait for that to pass before taking any aggressive positions," said a local brokerage house dealer.

Former deputy prime minister and now opposition leader Anwar says his party can form the next government with effect from September 16.

"We are hoping that this deadline doesn't change now, whether Anwar is successful in achieving his goal or not, so that the market can move forward," said the dealer. In a report on Wednesday, Credit Suisse flagged the continuing political instability in Malaysia, saying it remained "underweight" on the country.

"Sentiment indices show a very sharp fall. Sentiment is far more bearish than the economic reality, a fact that can really only be explained by politics," it said.

On Wednesday, Malaysia's key Composite Index closed 0.2 percent lower at to 1,085.38 points.

Meanwhile, Thai stocks are expected to fall on Thursday as a domestic political crisis continues to dampen the market mood, analysts said.

Prime Minister Samak Sundaravej said in a national radio broadcast that he would neither resign nor dissolve parliament in the face of a three-month street campaign by opposition activists.

"The market has weakened purely because of what's happening with our politics at this moment and there is no silver lining here to any resolution either," Reuters quoted Asia Plus Securities analyst Puwadol Lapudomsuk as saying.

Samak's foreign minister has quit, dealing another blow to the prime minister, two days after he invoked emergency rule following violent clashes between pro- and anti-government activists.

On Wednesday, Thailand’s main index extended its recent fall, closing down 1.45 percent at 649.93, having hit a fresh 19-month low of 648.95 in thin turnover of about 10 billion baht ($291 million). The index was expected to trade between 640 and 660 on Thursday, Puwadol said. Foreigners have continued to dump big-cap shares, helping drag the market down 25 percent so far this year.

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