Genting Malaysia’s Stock Drops 11% After Islamic Party Wins Most Seats in Election

Shares hit two-year low

Shares of Kuala Lumpur-based casino operator Genting Malaysia have plunged to a two-year low on the back of an Islamic party gaining the most seats in the 2022 Malaysian General Election (GE15) over the weekend.

Genting Malaysia’s shares dropped as much as 11%

On Monday, Bloomberg News reported that Genting Malaysia’s shares dropped as much as 11%. Shares in parent brand the Genting Group, meanwhile, slumped as much as 10% in the wake of the the country’s 15th general election.

The stock price of Malaysian lottery equipment provider, Sports Toto, also nosedived, hitting its lowest level since 1993. Alcohol producers, including Heineken Malaysia and Carlsberg Brewery Malaysia, also took big hits.

Fears of Shariah law

That gambling and alcohol stocks have dropped reflects dented investor confidence amid fears the election-dominating party, Mal Parti Islam Se-Malaysia (PAS), will implement hardline Shariah law in Malaysia.

The dominant party in the elections, PAS has in the past called for the establishment of Muslim religious law in Malaysia. As the largest party in parliament, the Islamic party “will be controlling a lot of policy generation and policy output of the new government” if they were to be part of it, Bloomberg cited senior fellow at the Singapore Institute of International Affairs, Oh Ei Sun, as stating.

Sun added that an “Islamist-led government will typically try to make the previously functioning democracy into an illiberal one, which would be very challenging for Malaysia.”

What this means is that casino operators like Genting and Number Forecast Operators (NFO)s like Toto Sport face the possibility of having their gaming and operating licenses frozen or canceled, according to The Edge Markets.

The threat is real

Malaysian research firm TA Securities warned in a report on Monday that the threat of license suspensions or terminations posed to gambling and NFOs was, indeed, a real one.

TA Securities said evidence stems from “the threat of banning NFOs after PN formed the state government in Kedah” — one of Malaysia’s nine states — and a PAS official was appointed menteri besar (chief minister) in 2020.

expects investors to take a “sell first and watch” approach

TA Securities added that it expects investors to take a “sell first and watch” approach in the short term amid government policy uncertainties.

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