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The benchmark FTSE Bursa Malaysia KLCI fell around 1.5% at the opening before settling at around 1.1%, underperforming most Asia-Pacific markets.
Malaysia is struggling to control an increase in Covid infections. Last week, the country reported five consecutive days of record increases in coronavirus cases, bringing cumulative infections to more than 565,500 cases with 2,729 deaths on Sunday, according to data from the Ministry of Health.
Prime Minister Muhyiddin Yassin announced on Friday after the market closed that the country would enter a two-week lockdown from Tuesday.
Brian Tan, an economist at Barclays Bank in Singapore, estimated that the measures will cost the Malaysian economy between 0.5 and 1 percentage point every two weeks.
Tan wrote in a note on Monday that he had lowered Malaysia’s growth forecast for 2021 from 6.5% to 5.5% – below the central bank’s projection range of 6% to 7, 5%.