Malaysia’s market accessibility level is in danger of being downgraded under the FTSE’s global classification framework.
“Malaysia, currently assigned a '2' and included to the WGBI since 2004, is being considered for a potential downgrade to ‘1’ which would render Malaysia ineligible for inclusion in the WGBI,” read a statement released by FTSE Russell yesterday. “These markets will be reassessed against the WGBI eligibility criteria at the September 2019 review.
According to Singapore’s Mizuho Bank Ltd head of economics and strategy Vishnu Varathan, the ringgit currency is also affected by headlines from former prime minister Najib Abdul Razak’s trial related to 1MDB as well as Malaysia’s dispute with the European Union over palm oil.also reported today that the benchmark FTSE Bursa Malaysia KLCI Index is down 14 percent from a record in May 2018, calling it the “worst major market in the world so far this year” as it has slipped 3.6 percent.
“Malaysia will likely disappoint over the next year because since the new government came in power in May 2018, it has been lowering public debt with fiscal tightening.