KUALA LUMPUR, May 15 (Bernama) - The financial market reaction to the change in the government was better than initially expected following the smooth power transition, said Permodalan Nasional Bhd ( PNB ) Group Chairman Tan Sri Abdul Wahid Omar.

He said the favourable market performance was also due country's strong economic fundamentals, with the services and manufacturing sectors continue driving the economy, contributing 55 per cent and 23 per cent to the gross domestic product.

"The better-than-expected performance was also due to the people and investors' confidence in the leadership of Prime Minister Tun Dr Mahathir Mohamad and his team, including the Team of Eminent Persons, comprising Tun Daim Zainuddin, Tan Sri Zeti Akhtar Aziz, Tan Sri Hassan Merican, Tan Sri Robert Kuok and Professor Jomo Kwame Sundaram," he said in a statement today.

The early commitment by the new government to enhance corporate governance, fight corruption and uphold business and people-friendly policies also spurred confidence in the financial markets, he added.

"Many investors were concerned about how the market would react on the first day of reopening (after elections). However, it was not as volatile as anticipated. On Bursa Malaysia, the key FTSE Bursa Malaysia KLCI closed 3.91 points higher at 1,850.42 after falling to a low of 1,800 in early morning.

"On the foreign exchange market,the ringgit recovered to the 3.95-level against the US Dollar after depreciating to 3.99 in early morning," he added.

As for the bond market, he said the return on the five-year Malaysian Government Securities increased marginally to 3.8655 per cent compared with 3.8283 per cent on May 8, 2018.

According to Abdul Wahid, the uncertainty in the stock market was expected to continue on the second day after markets reopened after the 14th General Election on Wednesday last week, nevertheless, the prevailing challenges could be overcome with the recent formation of the Team of Eminent Persons.

"There are a lot of challenges that we are facing, in the government's financial and fiscal management but the all these problems could be dealt with in an orderly manner," he added.

- BERNAMA