Malaysia is bucking the trend in what is generally a good 2019 for regional stock markets.

While Singapore and Indonesian markets have grown by four and three percent respectively, the FTSE Bursa Malaysia KLCI index has fallen more than one percent since the start of the year.

According to a report by Bloomberg, this trend is likely to persist as investors wait on the government to deliver on promises to cut the budget deficit, clamp down on corruption and boost purchasing power.

Jalil Rasheed, a Singapore-based investment director at Invesco Asset Management, said that patience is required.

“It keeps coming back to where the country is going to go, it's … on the government to lead the way,” he said.

The Pakatan Harapan administration has taken steps to clean-up some of the policies of the previous Najib Abdul Razak regime.

This includes cancelling and reviewing billion-dollar projects, replacing CEOs at state-linked companies and initiating legal action to reclaim lost monies over scandal-plagued state investment fund 1MDB.

Growth was 4.7 percent in 2018, with the new government targeting 4.9 percent this year.

Economists are predicting a slight dip with projected growth of 4.5 percent.

Sean Gardiner, Morgan Stanley's Southeast Asia strategist in Singapore, said emerging markets are currently more attractive to investors, and “we would need to see jitters coming back so that investors appreciate Malaysia’s defensive nature.”

Investors also need to see quick action on the country’s five-year economic plan touting transparency and institutional reform.

Alexander Chia, head of regional equity research at RHB Bank Bhd, pointed out that Malaysia is not alone in having sluggish markets following a change in administration. He cited India and Indonesia as examples of a slow first year and a fantastic rebound.

Uncertainty over the expected handover of power from Prime Minister Dr Mahathir Mohamad to Anwar Ibrahim may be another factor affecting investors.

“It’s difficult to have a positive outlook when there is political infighting and weak outlook on growth from fiscal tightening,” said Alan Richardson, a regional fund manager at Samsung Asset Management Co. in Hong Kong.

“There appears to be frustration with a lack of tangible benefits under the new government and the shadow of race-based politics,” he added.

The Bloomberg report advises caution, but does predict a strong showing if the new government can deliver on its promise.

If everything falls into place, Malaysia "could be a shining light of an emerging market,” said Jalil.