KUALA LUMPUR, May 24 — Malaysian stocks fell for a fourth straight session today as a widening probe over corruption linked to the previous government and continued capital outflows soured investor sentiment, while Indonesia soared for the third day running.

The Malaysian index slid 2 per cent to 1,768.18, its lowest level in five months.

Prime Minister Tun Dr Mahathir Mohamad vowed to cut the national debt of RM1 trillion during his first cabinet meeting this term, and widened an investigation into the scandal-hit state fund 1Malaysia Development Berhad (1MDB).

“The political malaise is weakening MYR (ringgit) and that usually triggers some outflow. But I also believe the local markets are caught up in the risk aversion,” said Stephen Innes, head of trading Apac at Oanda.

“Foreign money is not finding the situation very reassuring even more so with the stronger USD and higher US yields making servicing Malaysia’s foreign debt even that much more expensive,” he added.

Financials dragged, with Malayan Banking Bhd falling as much as 7.6 per cent, and Public Bank Bhd dropping 2.8 per cent.

Indonesian shares rose as much as 2.1 per cent with Bank Central Asia climbing 2.3 per cent, while automotive retailer Astra International rose 3.2 per cent.

News reports of the government’s plan to disburse its Eid holiday bonus of 36 trillion rupiah or RM10.1 billion (up from 18 trillion rupiah last year and 23 trillion rupiah originally budgeted for this year) is likely to push the Jakarta index up further, Trimegah Securities said in a note.

Increased bonuses to civil servants is seen as a way for the government to support consumption in Indonesia, which has been sluggish.

The country’s index of 45 most liquid stocks was up 2.6 per cent.

Singapore edged up 0.3 per cent, led by industrials and banks.

Lender Oversea-Chinese Banking Corp climbed 1.3 per cent, while Singapore Airlines was 2.1 per cent higher.

The city-state’s economy grew at a slightly faster pace in the first quarter than initially estimated, as factory activity remained robust. — Reuters