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This paper aims to explore the election cycle and financial markets puzzle in a unique emerging market like Malaysia.

By employing an event-study methodology and wavelet analyses, the author tests for uncertain information hypothesis by examining the reactions of the Kuala Lumpur Composite Index (KLCI) and ringgit surrounding Malaysian general elections, spanning from GE5 (1978) to GE14 (2018). This paper also explores the relationship between KLCI and ringgit.

While the author does not find support for the uncertain information hypothesis, the author uncovers that KLCI tends to overreact following elections, regardless of the winning coalition. The author also records no relationship between KLCI and ringgit in the short run, but the author observes that ringgit leads KLCI in the long run.

The study’s findings bear implications for investors' disposition in the Malaysian equity market. Investors should square off their positions before the general elections to avoid equity market overreactions and potential losses.

Before Malaysia GE14 (2018) general election, Barisan Nasional carried the reputation as one of the longest-serving ruling coalitions in the world since Malaya independence in 1957. However, the ruling coalition was voted out in GE14 (2018), and the Malaysian equity has since dropped.

This study aims to investigate Granger-causal relations between the Ringgit-USD exchange rate and selected domestic and international economic variables after the flotation of the Ringgit beginning with 25 July 2005.

The study uses lag-augmented vector autoregression (LA-VAR) developed by Toda and Yamamoto (1995) to test for Granger-causality. To visualize short-run dynamics in the Malaysian Ringgit (RM)-USD exchange rate to shocks in predictor variables, generalized impulse-response functions (Pesaran and Shin, 1998) are derived from the estimated LA-VAR models.

Results based on LA-VAR generalized impulse responses and data measured in daily frequency indicate strong Granger-causal relationships with the Dow Jones Industrial Average and oil prices. Evidence is also indicative for a causal relationship with the Shanghai Composite Index. Positive shocks in these three variables lead an appreciation of the Ringgit.

These results provide insights for policymakers in East Asia in their attempt to manage the floating of their currency.

The paper adds to existing empirical literature in three ways. First, it investigates the RM-USD exchange rate after its managed flotation beginning with 25 July 2005. Second, the study provides results for exchange rates measured in two frequencies, namely, daily and monthly. Third, the empirical LA-VAR model applied includes variables capturing economic and financial conditions in China. Prior literature puts a focus on macroeconomic conditions in the USA. Yet, since 2009, China has been the largest trading partner of Malaysia.

This study analyzes the impact of exchange rate volatility (ERV) on inbound tourist arrivals from four ASEAN countries namely Indonesia, the Philippines, Singapore, and Thailand during 1970–2017. Volatility in the exchange rates between the tourist currency and ringgit Malaysia is measured using the Generalized Autoregressive Conditional Heteroskedasticity model. The results from Autoregressive Distributed Lagged models indicate that ERV has no significant impact on tourist arrivals from ASEAN to Malaysia. This implies that tourists from these countries may not be sensitive to ERV when choosing Malaysia as their travel destination. There are two possible explanations for the results. First, Malaysian ringgit has been depreciating against major currencies and regional currencies in recent years, which makes ringgit relatively cheaper than other ASEAN currencies. Second, the empirical results of the study support the argument that ERV has a more serious impact on tourist spending compared to tourist arrivals.

An artificial neural network methodology is used to develop a new measure of contagion using exchange rate data from the Asian Crisis of 1997 and beyond. Connection weight changes during retraining of networks used to forecast exchange rates form the basis of this measure. These weight changes are used in obtaining a contribution factor for independent variables used in a forecasting process. Volatilities of contribution factors form the basis of the measure of contagion obtained. These volatilities are statistically validated through a series of simulations where critical values for them are derived. The measures of contagion obtained are then matched to concurrent economic and financial shocks that occurred during the crisis. It is found that there is good correlation between these events and the contagion measures obtained.

We study up to 27 years of weekly data on nine currencies to examine the importance of the Japanese yen in exchange rate determination in North and Southeast Asia. We combine a time-varying methodology alongside a focus on long-run equilibrium. Our findings suggest that the Japanese yen had virtually no influence on Asian exchange rates in the 10-year period prior to the Asian financial crisis in the late 1990s. Since the crisis, the yen and the German mark in particular have exerted a significant influence over the region's exchange rates except for the Chinese yuan, the Hong Kong dollar and the Malaysian ringgit, which continue to be closely related to the US dollar.

The renminbi (RMB) has evolved in four phases since its mid-2005 unpegging from the US dollar. After a year's transition, the RMB's effective exchange rate traded for two years within narrow bands around an appreciating trend. That is, the RMB behaved as if it were managed to strengthen gradually against trading partners’ currencies. This experiment was interrupted in mid-2008 and the RMB stabilized against a strong dollar amidst the global financial crisis. If Chinese policy were to return to effective currency stability and other East Asian countries were to pursue similar policies, regional currency stability would be enhanced. That would create more favorable conditions for an evolution towards monetary cooperation.

This paper examines Malaysia's perception of China following the Asian Financial Crisis. The Asian Financial Crisis, which occurred in 1997, resulted in a contraction in Malaysia's GDP, which resulted in increased unemployment in Malaysia. China is a rising economy. Several bilateral visits and trade missions meet both states to achieve an advantageous economic position. Malaysia's decision to rely on China despite historical events that had sparked tensions between the two countries. Despite Malaysia's economic downturn, the country is taking swift action to address the issue. During the crisis, Malaysia viewed Western countries as irresponsible and allowed the situation to deteriorate, which later became the reason for Malaysia's relationship with China. The crisis, however, has influenced Malaysian Chinese businesses to improve their foreign policy and bilateral relations. This paper contends that Malaysia recognizes the importance of its bilateral relationship with China in stabilizing its economic development and social activity following the crisis.

The aim of this paper is to investigate the circumstances and events surrounding bull runs in Malaysia from 1990 to 2015. The research question posed here is: What were the historical circumstances and events surrounding bull runs in Malaysia?

Case study approach is used. This research resorts to multiple resources such as academic journals, macroeconomic statistics, official publications, stock broker reports, annual reports of listed companies as well as articles from regional newspaper and magazines.

The results show that the bull runs in recent years happened with lower volatility after the Asian Financial Crisis. It can be conjectured that the specific environment in which the bull runs occurred can be somewhat different from period to period. Based on stylised facts and historical evidence, this study identified five major themes that were behind the bull markets in Malaysia, which include capital flow, spill-over effect from global development, change in ratings, speculative activities and investors’ sentiment, as well as government policies announcement. The findings have practical implications for investors who seek to understand and predict stock market boom through lessons learned from historical perspective.

The analysis in this paper may have limitation, as the facts gathered are from secondary sources, which sources are derived from the observations of others. Therefore, secondary sources inevitably reflect the assumptions and biases of the people who wrote them. As the availability of data is limited by factors that are not under the control of the researcher, results may likely be limited in their generalizability. This case study does not attempt to establish causality or relationship between macroeconomic variables and stock prices. Further studies would therefore be necessary to examine the evolving nature of the relationship that may exist.

The findings of this study have significant policy implications for Malaysia, and also for other emerging markets. First, a prudent macroeconomic measures and concerted stance on fiscal, monetary and exchange rate policy to improve fundamentals and smooth volatility in the business cycle is vital for a bullish stock market. Second, the stock market derived significant benefits from openness to foreign capital and its resilience can be enhanced by fostering deeper and more liquid capital markets with diverse institutional investors, including domestic and foreign participants. Third, the environment that affects a stock market could be related to the political, regulatory and global environments. Malaysia stock market is susceptible to extreme events, capital flow, speculative activities and government interventions. Having a good grasp of which themes are operative at any point in time is central to investment decision making. Continuous rebalancing of portfolios based on information arriving in the market is also vital.

Previous studies on Malaysian stock market movement focus on quantitative analysis based on macroeconomic variable. This research is original in terms of giving background information and additional context to explain phenomena missed by quantitative research methods. The construction of quantitative model is also constraint by the measurability of non-quantitative data and data with different frequencies (such as annual, quarterly and monthly data). Therefore, it is important to contemplate the importance of non-quantitative factors, such as political, legal, regulatory and governance considerations. This study seeks to fill in this void.