Increased securities trading activities positive for Bursa

KUALA LUMPUR: The increased securities trading activities year to date (YTD) have been positive for Bursa Malaysia Bhd (Bursa) given that this segment underpinned growth, analysts observe following the group’s latest financial statement.

As per Bursa’s statement, for the nine-month financial period ended September 30, 2018 under review, the Securities Market registered trading revenue of RM207.7 million compared to RM195 million in the previous corresponding period.

This marked a revenue growth of 6.5 per cent driven by higher average daily trading value (ADV) for on-market trades (OMT) in the first nine months of 2018 (9M18), which grew by 10.5 per cent yearover-year (y-o-y).

According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), this was due to the ADV growth momentum in July, August and September which increased by 19.2 per cent y-o-y, 20.7 per cent y-o-y and two per cent y-o-y.

“We believe that there was possible an increased in trading interest after the sell down post 14th General Election (GE14),” MIDF Research said.

It noted that ADV in the third quarter of financial year 2018 (3QFY18) of RM2.2 billion was the highest for the past seven years.

“Moving forward, we foresee continued momentum in this segment until end of FY18 period whereas the pace will be moderated in FY19.”

MIDF Research remained cautiously optimistic of the growth in FY19 due to ongoing internal and external uncertainties.

Nevertheless, the research arm believed that there are a few moderating factors such as potential paring down of government’s stake in companies which may bring greater liquidity and volume to the capital market, and the continued expansion of the group’s Bursa Suq Al-Sila’ (BSAS) platform into African and Central Asian countries.

“These may provide support for Bursa growth next year.”

In the near term, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) opined that while 4Q periods are seasonally more active in anticipation of window dressing, the current highly volatile landscape may result in investors to adopt more risk-adverse strategies.

“Domestic and foreign interests could be clouded by uncertainty of the coming Budget 2019 while the persistent external uncertainties, i.e. US and China Trade Tension and Fed’s aggressive interest rate hike stance; will continue to put pressure on investment sentiment,” Kenanga Research said in its results note.

“However, in the long-term, the domestic equity scene could provide attractive investment opportunities for local and foreign investors, mainly thanks to the low beta nature.

“Our strategist also believes that downside could be limited in view of favourable seasonal patterns to come, further backed by stronger oil prices and greater institutional injection support in the near-term.”