Malaysia: Johor state election delivers a larger BN majority

Research evidence excerpt

Malaysia: Johor state election delivers a larger BN majority

Goldman Sachs Malaysia

contributing to the ringgit’s regional outperformance in 2025. Any renewed uncertainty

over federal coalition cohesion and the continuity of the government’s economic agenda

could put part of this policy-stability premium at risk, even if Malaysia’s macro

fundamentals remain supportive.

With further political events ahead and renewed US-Iran tensions weighing on global risk

sentiment, MYR may remain choppy. That said, Bank Negara Malaysia intensified existing

measures to encourage FX inflows in June, including stronger engagement with

government-linked companies, government-linked investment companies and private

companies to repatriate overseas earnings and convert more foreign-currency income

into MYR. These measures should help contain excessive volatility and depreciation

pressure, even if the domestic political risk premium persists.

What to watch next: Political attention will next turn to the Negeri Sembilan election on

1 August, followed by the Democratic Action Party (DAP)’s National Conference on 16

August. DAP is a core component in PM Anwar’s PH coalition and holds 40 parliamentary

seats, making it the largest parliamentary component at the federal level. The

conference may attract market attention for how party leaders assess the Johor and

Negeri Sembilan results and discuss the DAP’s position within the federal unity

government.

Melaka could be the next state election on the calendar. Chief Minister Ab Rauf Yusoh

said in June that the state assembly could be dissolved within three months, potentially

allowing an election to be held as early as September. No election date has been

confirmed, while the current assembly’s term expires in December 2026.