Malaysia's governing coalition extended its half-century rule despite its worst-ever performance in a general election, potentially undermining Prime Minister Najib Razak and exposing growing racial polarization in the Southeast Asian nation.
Najib, 59, could come under pressure from conservatives in his ruling party for not delivering a stronger majority in Sunday's election despite a robust economy and a $2.6 billion deluge of social handouts to poor families.
The National Front won 133 seats in the 222-member parliament, down from 140 in 2008 and well short of the two-thirds majority that Najib had aimed to capture. The opposition won 89 seats, up from 82 last time.
Kuala Lumpur's stock market could gain on Monday on investor relief that the untested opposition failed to take power, but any optimism could be tempered by the prospect of political uncertainty due to the weak win. The Malaysian ringgit surged to a 10-month high early on Monday.
While support for the ruling coalition from majority ethnic Malays remained solid, ethnic Chinese who make up a quarter of Malaysians continued to desert the National Front, accelerating a trend seen in the previous election.
Ethnic Chinese have turned to the opposition, attracted by its pledge to tackle corruption and end race-based policies favoring ethnic Malays in business, education and housing.
"We will work towards more moderate and accommodative policies for the country," a grim-faced Najib told a news conference after the majority was confirmed. "We have tried our best but other factors have happened ... We didn't get much support from the Chinese for our development plans."
Former Prime Minister Mahathir Mohamad, still a powerful figure in the dominant United Malays National Organisation (UMNO), told Reuters in an interview last year that Najib must improve on the 140 seats won in 2008. Najib could face a leadership challenge from within UMNO later this year as a result of falling short.