We don’t hear much about Malaysia when discussing geopolitics, but the nation of 30 million plays a significant role as a partner to the U.S. on trade and politics, which is why I always include it on my research trips.

Malaysia is scheduled to elect members of the 14th parliament, but when that election will take place is a mystery. The vote is due on or before August 24, 2018, but Prime Minister Datuk Seri Najib Razak has full power to decide when it will be held.

Whenever it is called, the vote will be one of the biggest political battles the country has seen because Najib has created a larger, more authoritarian state, much like Recep Tayyip Erdogan has done in Turkey. As a result, he is very unpopular.

That’s where the story gets strange. Despite Najib’s unpopularity, he’s likely to win the election. That’s because his opponent, former Prime Minister Mahathir Mohamad, is arguably even less popular. Mohamad is 92 years old and has partnered with a former deputy prime minister, Anwar Ibrahim, who is currently serving a five-year jail term. It remains unclear who would even lead the government if they win.

Our best guess is the election will be called for sometime after the Northeast monsoon season, which lasts from October to March, because a monsoon could reduce voter turnout.

Near-term, Malaysia has an incentive to continue to leverage trade deals, including those solidified between Malaysia and the United States during a visit to America this fall. It is poised to be positive for the country’s economy, because local markets can only provide so much. As expected, we have also seen the release of a voter-friendly annual budget at the end of October. These signs all point to stability and continued support to growth.

Longer-term, however, we’re wary that Razak’s regime might prove unhealthy for economic growth. If we end up with a situation like the one in Turkey, where Erdogan is carrying out the harshest crackdown in decades, the prospects for growth and investment will rapidly deteriorate.

Given this dynamic, we continue to maintain some modest long exposure to both the Malaysian equity market as well as to the currency.

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Please carefully consider the Funds’ investment objective, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus, which you may obtain by calling +1 800 742 7272. Read it carefully before you invest or send money. Investing includes the risk of loss.

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Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Investments are subject to market risk. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Statements concerning financial market trends are based on current market conditions, which will fluctuate.

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Please carefully consider the Funds’ investment objective, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus, which you may obtain by calling +1 800 742 7272. Read it carefully before you invest or send money. Investing includes the risk of loss.

Any statements or opinions expressed are those of the author as of the date of publication, are subject to change without notice as economic and markets conditions dictate, and may not reflect the opinions of other investment teams within William Blair Investment Management, LLC or the Investment Management Division of William Blair & Company, L.L.C.

This content is for informational and educational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions.

Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Investments are subject to market risk. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Statements concerning financial market trends are based on current market conditions, which will fluctuate.

William Blair does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax questions and concerns.

Distributed by William Blair & Company, L.L.C., member FINRA/SIPC.

Copyright © 2018 William Blair & Company, L.L.C. "William Blair” is a registered trademark of William Blair & Company, L.L.C. No part of this material may be reproduced in any form, or referred to in any other publication, without express written consent.

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