title: The effect of Malaysia general election on stock market returns.
abstract: During the latest episode of general election held in Malaysia, it is observed that the FBMKLCI index was lifted 62.52 points in a day soon after the announcement of election outcome. Moreover, the index registered a highest gain of 96.29 points in the middle of the intra-day trade. This suggests that investors who had got the right direction could make profitable intra-day trading the next trading day of the general election date. Results from statistical analysis uncover significant before-election-effect and after-election-effect from the most recent general elections held in Malaysia. Different subsets of macroeconomic variables are found to have significant role on stock market return depending on the market situation. Remarkably, when there was close fight between the two major political parties during the 2008 and 2013 election years, political uncertainty showed up its negative and significant role in influencing the stock market return. The major implication of these findings is that while investors may seek abnormal returns before and after the next general election, which is around the corner, they will have to pay attention on the influence of macroeconomic variables and political uncertainty on stock market return during the election year.
authors.affiliation: Centre of Excellence for Business, Economics and Finance Forecasting, Faculty of Economics and Business, Universiti Malaysia Sarawak, 94300 Kota Samarahan, Sarawak Malaysia.
authors.forename: Venus Khim-Sen
authors.initials: VK
authors.lastname: Liew
authors.affiliation: Centre of Excellence for Business, Economics and Finance Forecasting, Faculty of Economics and Business, Universiti Malaysia Sarawak, 94300 Kota Samarahan, Sarawak Malaysia.
authors.forename: Racquel
authors.initials: R
authors.lastname: Rowland
keywords: General election effect; Malaysia; Stock market