Affin Hwang keeps ‘buy’ call on Bursa Malaysia
KUALA LUMPUR: Another month of robust equity and derivatives trading on Bursa Malaysia is imminent with the equity market average daily value having risen to RM5.1 billion.
Affin Hwang Capital said this was driven by upbeat sentiment due to the rollout of Covid-19 vaccines and more economic sectors being allowed to operate in a relaxation of Movement Control Order restrictions.
It said derivatives trades, crude palm oil futures and FTSE KLCI futures picked up strongly last month.
Affin Hwang expects Bursa Malaysia Bhd to post a net profit of RM108 million in the first quarter, representing a 130.6 per cent growth year-on-year and three per cent quarter-on-quarter.
“The catalysts include more certainty for an economic recovery, a prolonged low interest rate environment, ample liquidity and a return of corporate profits, which will underpin investors’ confidence in Bursa Malaysia’s equity and derivatives markets.”
It added that retail participation, which grew aggressively last year, continued to hover at 39 per cent in the first quarter, versus historical levels of 20 per cent.
This was driven by the entrance of younger and more savvy investors, leading to a boom in online trades and ample liquidity.
“Hence, it was not a surprise to see an elevated level of equity market velocity, which had sustained at between 60 and 70 per cent since May last year.
“We believe that this can be the ‘new norm’. Even derivatives trading, which recorded a new high last year, may see the trend sustaining this year.”
Affin Hwang raised its financial years 2021, 2022 and 2023 earnings forecasts for Bursa Malaysia by 15.8, 9.8 and 6.4 per cent, respectively.
This is after computing a higher equity average daily trading volume assumption of RM4 billion to RM4.3 billion and derivatives’ average daily contracts of 85,300 for this year, and 68,000 contracts for next year and 2023.
Affin Hwang maintained its “buy” call on Bursa Malaysia with a higher target price of RM12.15 from RM10.90 previously.