Boon for Bursa Malaysia
New capital market measures to increase trading velocity, liquidity
PETALING JAYA: Capital market measures unveiled by Prime Minister Datuk Seri Najib Tun Razak are expected to be a boost for stock exchange operator Bursa Malaysia Bhd as they will add to the trading velocity and liquidity of the local bourse.
Among the measures favoured by analysts include the exemption of stamp duty on shares of mid- and small-cap companies traded on Bursa Malaysia, along with the establishment of a stock market trading link between Bursa Malaysia and Singapore Exchange.
The initiatives have prompted RHB Research to upgrade Bursa Malaysia to a “buy” call on the back of higher net profit forecast by 4% this year.
It pointed out that the exemption of stamp duty on shares of mid- and small-cap companies traded on Bursa Malaysia is a positive development to increase trading volume for such stocks, going forward.
“Despite uncertainties from the recent decline in global markets, we believe Bursa Malaysia should benefit from increased trading volumes with the upcoming general election, as well as the capital market initiatives mentioned by the PM yesterday.
“In addition, Bursa Malaysia has a robust balance sheet with a net cash position, and the stock offers an attractive 2017 dividend yield of close to 5%,” RHB said.
Meanwhile, CIMB Research has also raised its earnings forecasts on Bursa Malaysia for FY18 and FY19 to about 3.2% in view of the strong equity market’s trading value in the fourth quarter last year and January this year.
“Despite our positive outlook on equity income in 2018, we retain a ‘hold’ call on Bursa due to the concerns over the contraction in derivative income,” it said in a report yesterday.
Meanwhile, Bursa Malaysia’s chief executive officer Datuk Seri Tajuddin Atan said that the capital market measures further echoed the long-standing efforts aimed towards increasing the depth and breadth of the capital market.
“The exemption of stamp duty on shares of mid- and small-cap companies traded on Bursa Malaysia is a recognition of the importance of this market segment.
“This will further boost our current initiatives such as Mid and Small Cap (MidS) Research Scheme and the Leading Entrepreneur Accelerator Platform (Leap) Market,” he said in a statement yesterday.
On the establishment of the trading link between Bursa Malaysia and the Singapore Exchange, Tajuddin said that Bursa Malaysia will work with Singapore Exchange, the industry and the relevant regulatory bodies in operationalizing this cross-border initiative.
“Bursa Malaysia is committed in our pursuit to strengthen our proposition as Asean’s multinational marketplace with global connectivity and the stock market trading link between Bursa Malaysia and Singapore Exchange announced by the Prime Minister earlier could potentially be a step towards this goal,” he said.
Bursa Malaysia’s net profit for its fourth quarter ended Dec 31, 2017 rose to RM55.27mil from RM50.17mil in the previous corresponding period, underpinned by higher trading revenue as well as listing and issuer services.
Revenue in the fourth quarter increased to RM141.20mil from RM123.74mil a year earlier.
For its financial year ended Dec 31, 2017, the stock exchange operator’s net profit increased to RM223.04mil from RM193.62mil in the previous corresponding period, while revenue grew to RM556.83mil from RM506.78mil a year earlier.