• Bursa Malaysia: Recovering from 2016’s low

Since the beginning of the year, Bursa Malaysia Bhd (Bursa Malaysia) recorded steady growth thanks to the support of improved market activities.

In the third quarter of 2017 (3Q17), the exchange recorded a 17 per cent year-on-year (y-o-y) increase in its profit after tax and minority Interest (PATAMI) to RM167.8 million for the nine month financial period ended September 30, 2017 (9M17).

This is compared to RM143.5 million registered in the same period last year.

In a statement, Bursa Malaysia’s chief executive officer Datuk Seri Tajuddin Atan said the growth in PATAMI was attributable largely to the increase in both trading and non-trading revenue.

“The equity market remained buoyant up toto end of 3Q17. The benchmark FBM KLCI registered a 6.9 per cent gain

in the first nine months of 2017 on the back of overall positive market sentiment and net inflows from foreign investors.

“Increase in listing fee collections from higher and larger initial public offerings (IPOs) and new structured warrants listed, together with processing fees earned from corporate exercises, contributed to the increase in non-trading revenue.”

Favourable market conditions also contributed to improved market activities as the period under review, the average daily trading value (ADV) for the Securities Market’s On-Market Trades (OMT) increased 24.8 per cent to RM2.3 billion.

The Average Daily Contracts (ADC) traded for the Derivatives Market stood at 58,817 contracts – a marginal increase of 0.2 per cent. Positive momentum to continue

In a report, MIDF Amanah Investment Bank Bhd ( MIDF Research) believed that this positive momentum on Bursa Malaysia would continue until the end of 2017.

“Bursa Malaysia’s 9M17 operating revenue recorded an increase of 8.9 per cent y-o-y to RM392.1 million. This was in parallel with its 3Q17 where operating revenue reached RM122.6 (9.7 per cent y-o-y). The topline improvement was primarily driven by higher securities trading activities.

“We noted that the annual ADV traded (OMT) for 9MFY17 was RM2.3 billion, the highest since FY07,” it highlighted.

It also pointed out that there is upward support to earnings from Listing and Issuer Services as well as Depository Services segments.

“For 9MFY17, ADC traded appeared almost flat at 58, 817 contracts in comparison to the same period last year. However, the de- mand for FCPO continued to be resilient recording a growth of 6.2 per cent y- o- y to 49, 943 contracts,” it added.

It also noted that Bursa Malaysia’s performance for 3Q17 is in line with its expectations.

Nevertheless, an upward adjustment to its FY17 and FY18 earnings estimates are necessary, it said, given Bursa Malaysia’s improving performance so far.

“We believe an upward adjustment to the FY17 and FY18 earnings is justified, given Bursa Malaysia’s overall positive performance thus far.

“This is further supported by our in-house economic forecast, expecting a positive macroeconomic performance for the rest of the year and 2018.

“This view will translate to better stability in the Malaysian economy, which will further boost investors’ confidence. Additionally, trading activities in FY18 is expected to trend higher stemming from a long- term structural demand in the local market,” it opined.

Stronger fund raising activities

In its report on Malaysia’s economic performance for 2Q17, the Ministry of Finance reported that fund raising activity in the capital market remains active in 2Q17.

“Gross funds raised in the capital market rebounded significantly by 19 per cent to RM56.9 billion ( compared to RM48 billion in 2Q16),” it reported.

It pointed out that the funds in 2Q17 raised in the equity market increased significantly by 71.8 per cent to RM3.5 billion (2Q16: -37.4 per cent; RM2.1 billion), driven by five new listings of IPOs during the quarter with one notable IPO issued in June, the largest since 2012.

IPOs raised this year have been far better than 2016, as according to Bursa Malaysia, a total of RM7.4 billion IPOs have been raised within 9M17 compared with RM0.5 billion recorded in the same period last year.

This was driven by mega listings such as Eco World International Bhd (EWI) which raised RM2.58 billion proceeds from its IPO and Lotte Chemical Titan Holding Bhd (LCT) which clocked in a RM3.45 billion proceeds from its listing.

The equity market remained buoyant up to end of 3Q17. The benchmark FBM KLCI registered a 6.9 per cent gain in the first nine months of 2017 on the back of overall positive market sentiment and net inflows from foreign investors.

Datuk Seri Tajuddin Atan, Bursa Malaysia’s chief executive officer