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Malaysia in transition

Malaysia's hidden debt and 'insolvent' state fund raise alarm

Investors flee as US rate hikes compound Mahathir's fiscal challenges

KUALA LUMPUR -- Fears over Malaysia's larger-than-expected national debt and the "insolvency" of its state fund have sparked a broad equities sell-off, highlighting the economic battles awaiting Prime Minister Mahathir Mohamad's new government. 

The benchmark Kuala Lumpur Composite Index was down 4.2% for the week, as of Thursday. While much of Malaysia is still basking in the afterglow of Mahathir's surprise election triumph, foreign investors are increasingly uneasy about the country's fiscal health.

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