Asia politics throw investors a curveball
The rapidly unfolding political situation in different parts of Asia threatens to further upend the region’s financial markets.
This week has offered a barrage of news to rattle global markets.
In Malaysia, prime minister Muhyiddin Yassin resigned along with his cabinet on Monday, just over 17 months after taking power, sparking fresh worries about leadership in the southeast Asian country.
Yassin had initially become prime minister after a power struggle with his predecessor, Mahathir Mohamad, but soon after taking office had to navigate the havoc caused by the Covid-19 pandemic. The resulting economic crisis has been so extreme that Fitch Solutions recently revised its 2021 GDP growth forecast for Malaysia to 0% from 4.9%.
Members of parliament in Malaysia were due to tell the country’s king their choice of a new prime minister by 4pm local time on Wednesday, meaning a new leader may very well be in place soon.
But the protracted political instability has taken a toll. Foreign investors hold about 40% of Malaysia’s sovereign debt, and outflows have risen in recent months as growth stalls in the country. The benchmark Kuala Lumpur Composite Index has fallen by about 6.4% year to date.
On the other end of Asia's market-moving problems is the unravelling of the crisis — both political and humanitarian — in Afghanistan.