Vibrant outlook expected Bursa’s new new offerings
KUCHING: Researchers with TA Securities Holdings Bhd (TA Research) foresee a more vibrant 2024 as Bursa Malaysia strategically unveils several innovative investment assets and tools to broaden investor engagement and mitigate the decline in operating income.
The launch of the Bursa Gold Dinar app, focusing on gold as an investment asset, holds promise for generating new revenue streams and diversifying Bursa’s offerings.
Additionally, the bourse is actively moving forward with the launch of an innovative currency futures product.
On Tuesday, Bursa Malaysia launched the SME X Platform in collaboration with the Companies Commission of Malaysia (SSM), to further support corporate fundraising and business investment opportunities.
The SME X Platform ensues from the memorandum of understanding signed between Bursa Malaysia and SSM at end 20221, which among others was to enhance data analytics for strategic business decisions in line with the National Data Sharing Policy (NDSP).
“Our optimism is further buoyed by the Bursa Carbon Exchange, introduced in September 2023, which has initiated trading in carbon credits,” it said in its review yesterday.
“The forthcoming inclusion of Renewable Energy Certificates (RECs) by 3Q24 adds another layer of potential growth.
“Beyond facilitating companies in attaining net-zero targets through the trading of carbon credits and RECs, we perceive this initiative as a catalyst capable of bolstering foreign participation in the market.
“This strategic move not only aligns with evolving sustainability trends but also positions Bursa Malaysia as a key player in fostering environmentally conscious investment opportunities.”
To recap, Bursa reported a 20.5 per cent year on year (y-o-y) increase in its net profit for the third quarter of 2023 (3Q23).
As for the net profit for the first nine months of 2023 (9M23), it grew from RM177.6 million to RM192.8 million, representing 75 per cent of the firm’s full-year estimates. Looking ahead to the fourth quarter results, TA Research anticipated for Bursa to deliver a predominantly stable sequential performance.
“However, there is a potential downside risk to our full-year forecast, stemming from the absence of a notable acceleration in trading activities during the 4Q and the possibility of softer-thanexpected contributions from the non-trading revenue segment,” it said.
“We anticipate that the overall trading revenue should remain stable quarter on quarter (q-o-q). This expectation is anchored in the assumption that total average daily volume and trading velocity would stay relatively steady.
“That said, we predict that trading velocity will remain unchanged at around 30 per cent in 4Q. Elsewhere, we note that Bursa recorded a modest net outflow in foreign funds during the fourth quarter, following a net inflow of RM2.2 billion in the third quarter.”
To recap, the YTD total net foreign outflows amounted to RM2 billion in 9M23, compared to a total net foreign inflow of RM4.4 billion in 2022.
On the derivatives market, while TA Research foresees an ongoing challenge in the overall average daily contracts (ADC) due to the subdued volatility of crude palm oil (CPO) prices and the FBM KLCI on a yearly basis, the research firm maintained an optimistic outlook.
This optimism stems from the introduction of T+1 After-Hours Trading, which it believes will further contribute to an elevation in overall trading activities within the derivatives segment.
Notably, the T+1 After-Hours Trading ADC demonstrated an 8.2 per cent y-o-y increase in the first 9M23, constituting 10.8 per cent of the total ADC—up from 9.4 per cent in the same period of 2022.
“Meanwhile, the capital market activities demonstrated improvement, as reported in the recent 9M23 results, with total funds raised experiencing a modest uptick to RM8.1 billionn (compared to RM7.2 billion in 9M22).
“Despite this positive trend, the addition of only seven new listings in 4Q is expected to result in a total of 32 listings for the year, falling short of the management’s targeted 39 IPOs and below the 35 new IPO listings recorded in 2022.
“Nevertheless, while this may pose a potential challenge to listing and issuer Services fees, which had witnessed an 8.3 per cent y-o-y decline in 9M23, we anticipate compensatory growth from various non-trading revenue segments.
“These segments include depository services, data business, member services and connectivity, and income derived from conferences and exhibitions.”