KUALA LUMPUR (May 25): MBSB Research said pre-election market performance has been inconsistent, with no clear or reliable pattern in returns ahead of general elections, reinforcing the view that elections are not a dependable market driver.

The firm, which analysed GE5 (1978) to GE15 (2022) data, said most elections have historically been called early, with about 79% being snap polls and timing ranging from 19 months to about six to seven months before the end of a parliamentary term. Only three out of 14 Parliaments completed full or near-full terms.

MBSB Investment Bank said it cannot predict the timing of the current Parliament’s term, as it depends on many factors, and instead focused on studying past market performance during general elections.

Parliament must be dissolved by December 2027 for GE16, meaning the country is about 19 months away from the latest possible timeline. The data suggests early elections are more common than any consistent market reaction to them.

MBSB Research’s analysis found that only about 47% of pre-election periods recorded positive returns, while around 52% saw more days of gains, indicating a mixed and uneven rally pattern.

The study also found that markets often peaked before polling day, suggesting some pre-election upward movement, but this was not consistent enough to be linked directly to elections. Instead, factors such as US interest rate movements during GE15 in 2022 were seen as having a stronger influence on market direction than election cycles.

Overall, the research concluded that general elections do not reliably indicate whether the market will rise or fall, as performance is driven more by broader external factors.

Looking ahead, MBSB Research said external developments — particularly ongoing Middle East tensions — will remain the key driver of market sentiment, with risks still present in energy and shipping despite a fragile easing of geopolitical pressures. It advised investors to stay defensive and focus on stable, dividend-paying stocks.

The firm also maintained its 2026 targets for the FBM KLCI at 1,800 points, FBM Emas Shariah at 13,100 points, and FBM 70 at 18,900 points.