Malaysia's stocks and currency have tumbled but bargain buyers don't appear likely to step up any time soon as foreign investors remain leery, analysts said.
"Our economists are constructive on Malaysia's medium-term prospects," Khoon Goh, senior foreign-exchange strategist at ANZ, said in a note Wednesday. "Unfortunately, the fundamentals are being overshadowed by domestic political developments that have soured sentiment towards Malaysian assets."
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Amid calls for his resignation, embattled Prime Minister Najib Razak shuffled his cabinet in July, sacking his deputy after he called on Najib to explain the controversy surrounding a Wall Street Journal (WSJ) report that nearly $700 million from heavily indebted quasi-sovereign wealth fund One Malaysia Development Bhd. (1MDB) was deposited into the prime minister's personal bank accounts.
Najib has denied accepting money for personal gain and is reportedly considering a defamation lawsuit against the WSJ. On Monday, Malaysia's anti-corruption commission said the funds in Najib's private accounts were a "contribution" from a Middle East donor unconnected to 1MDB; it said the donor's identity couldn't be disclosed.