Network Topology of KLCI During the 2023 Malaysian State Elections: A Minimum Spanning Tree Approach

Siti Hajar Nur A’easiah Natry Rosli; Mohamed Faris Laham; Zurita Ismail; Hafizah Bahaludin

doi:10.47405/mjssh.v11i4.3903

Siti Hajar Nur A’easiah Natry Rosli Department of Computational and Theoretical Sciences, Kulliyyah of Science, International Islamic University Malaysia, 25200 Kuantan, Pahang, Malaysia
Mohamed Faris Laham Institute for Mathematical Research (INSPEM), Universiti Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia
Zurita Ismail Institute for Mathematical Research (INSPEM), Universiti Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia
Hafizah Bahaludin Department of Computational and Theoretical Sciences , Kulliyyah of Science, International Islamic University Malaysia, 25200 Kuantan, Pahang, Malaysia

DOI: https://doi.org/10.47405/mjssh.v11i4.3903

Keywords: Bursa Malaysia, Minimum spanning tree, Degree centrality, Financial network

Abstract

A financial network represents stocks as nodes linked by correlations, reflecting the complex and dynamic nature of stock markets. While financial network analysis has been widely used to study market behaviour during major global events, limited attention has been given to structural changes in the Malaysian equity market during domestic political episodes. This study addresses this gap by examining network topology shifts surrounding the 2023 Malaysian State Elections, a period marked by heightened political fragmentation and uncertainty. The analysis focuses on the top 30 companies of the FTSE Bursa Malaysia KLCI. Daily closing prices are examined over a window spanning one month before and one month after the elections, from 11 July 2023 to 13 September 2023. The elections covered six states: Selangor, Kelantan, Terengganu, Negeri Sembilan, Kedah, and Penang. A minimum spanning tree approach is employed to visualise market structure, while degree centrality is used to measure the relative influence of individual stocks. The results reveal a clear regime shift driven by political sentiment. Prior to the elections, the network is highly centralised around Genting Malaysia Berhad, indicating market sensitivity to the “Green Wave” narrative and perceived regulatory risks affecting the gaming sector. Following the elections, the network rapidly reverts to a fundamentals-driven structure centered on major banking stocks, particularly CIMB and RHB Bank, reflecting a return to conventional macroeconomic considerations.

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