Malaysian politics turned upside down

By Mark Bendeich - Analysis

KUALA LUMPUR (Reuters) - Malaysians awoke on Sunday to a vastly altered political landscape after voters suddenly and unexpectedly questioned five decades of political status quo and decided it was time for a change.

Malaysians from across the country's deep racial divide deserted the ruling coalition in droves at general elections, handing control of its north to Islamists and its industrial hub to leftists.

The result from Saturday's elections were still being counted on Sunday morning, but the protest vote looked to hand an unprecedented five state assemblies to the opposition and cut the coalition's majority in federal parliament to a record low.

"It's bad," said a source close to Prime Minister Abdullah Ahmad Badawi, attributing the massive protest vote to a raft of concerns focusing on rising prices and religious tensions.

"It's a perfect storm."

The result has raised security fears: the last time the multi-racial Barisan Nasional (National Front) suffered a big setback, in 1969, race riots and a state of emergency ensued.

"The only other time this happened was in 1969 and that's why everybody is very nervous now because of the uncertainty," said Bridget Welsh, political analyst with Johns Hopkins University.

Malaysia's streets were largely quiet, and political experts said they doubted there would be racial violence this time, noting that all of Malaysia's major ethnic communities -- Malays, Chinese and Indians -- had deserted the government.

In 1969, the majority Malay community had stayed loyal to Barisan while the Chinese backed the opposition, setting the stage for racial clashes.

About 200 people were killed, according to the official tally, but unofficial estimates were much higher.

Barisan and the opposition both appealed for calm on Sunday.

But peace on the streets is unlikely to totally erase investor concerns as they survey the surprising new political landscape.

"This is probably not good news for the equity market or the ringgit," said Tim Condon, Singapore-based head of Asia research for investment bank ING.

ISLAMISTS FAN OUT

Islamist party Parti Islam se-Malaysia (PAS), whose platform calls for stonings and amputations of Muslim thieves and adulterers, looks set to win control of three northern states, stretching along Malaysia's border with Thailand.