Trading activities to slow down in 2019

KUCHING: Trading activities are expected to taper on Bursa Malaysia in 2019 as signs from January and February this year showed a slowdown.

This comes as equities ADV in the first two months was a slower RM2.17 billion against RM2.57 billion seen last year, while derivatives ADC was 43,000 in those two months versus 2018’s 56,500.

“Ex t e rna l headwinds include slowing global growth, monetary policy normalisation by major central banks and US- China trade spat, while domestic headwinds include policy uncertainties,” said the research arm of Maybank Investment Bank Bhd (Maybank IB Research).

“That said, Bursa’s riskreward is about balanced after its recent share price retreat.”

To note, equity trading revenue made up 51 per cent of Bursa’s operating revenue in FY18, whi le derivative trading revenue compirised 15 per cent. Cost items have been stable with CIR at 44 per cent in FY18.

“We see two catalysts for Bursa: stronger equity ADV on the back of return of foreign interests; and dividends surprising again, with another special for the third consecutive year.

“While Bursa’s cash balance retreated to RM223 billion end- FY18, its LT investment securities have grown to RM338 million.”

Maybank IB Research has imputed MYR2.3b equity ADV for FY19E, and two per cent YoY higher derivative trading revenue; we maintain our forecasts for now despite the softer Jan-Feb 2019.

“Consequently, we estimate net profit to retrace seven per cent YoY in FY19. Assuming 93 per cent DPR, our DPS forecast for FY19 derives a lower 24sen ( FY18: 25.6sen normalised), in turn, implying a yield of 3.5 per cent – decent, but not entirely enticing.

“We have imputed just normalised dividend for FY19E ( FY18: 8sen special).”