Malaysian shares are likely to fall further due to the stormy domestic political climate and worries about a weak US economy, analysts said. They said allegations about deputy prime minister Najib Razak's involvement in the murder of a Mongolian woman as well as claims by a youth that he was sodomised by opposition leader Anwar Ibrahim had sparked political concerns.
"These political uncertainties will continue to dampen the bourse," said Yeah Kim Leng, group chief economist with RAM Holdings. He added that the weak US economy could also fuel selling pressure as the US is Malaysia's largest trading partner.
"Investor sentiment is expected to remain weak and cautious," said Yeah. "But I don't think the bourse will fall sharply as the country's economic fundamentals remain strong and companies will continue to post profits."
He also said the unprecedented closure of the exchange on Thursday caused by a technical failure will cast a negative sentiment across the market. Local brokerage TA Securities said "any absence of buying support should see increased downside risk towards the next pivotal low of 1,050, last seen on December 19, 2006."
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