Bursa to continue to benefit from stronger trading appetite
Bursa Malaysia Bhd (Bursa) will continue to benefit from stronger trading appetite of market participants, analysts observe, despite the economic uncertainties which could stabilise by the second half of 2020 (2H20).
Post-2019 lull, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) anticipated high levels of volatility to persist as investors seek comfort in counters which are the least scathed by the Covid-19 pandemic and falling commodity prices.
“Retailers also took bets in the heightened activity, with rebounds from low bases appearing to be a favourite theme,” Kenanga Research said.
“Globally, multinationals have begun guiding earnings weakness which could leave investors ji ery, with the spillover effects yet to be fully felt in the indices.
“That said, the heightened trading activity will continue to boost Bursa’s top-line at this juncture.”
Meanwhile, upcoming initiatives are in the pipe-line to develop more information-based products for diversification when trading volatility eases, which the research arm anticipated could be seen in 2H of financial year 2020 (2HFY20) and FY21.
“For now, year to date (YTD) to April 30, 2020 average daily trading value (ADV) stood at RM2.54 billion, versus YTDApril 30, 2019 of circa RM2.09 billion.”
Post Bursa’s 1QFY20 profit a er tax and minority interest (PATAMI) of RM64.7 million which came above estimates, Kenanga Research raised its FY20E-FY21E earnings by 14 per cent-nine per cent on more bullish assumptions in derivatives trading and other operating income, which the research arm hoped to see more of in the later part of FY20.
“Keeping with similar payout ratio (circa 95 per cent), we are hopeful that dividend payments could amount to 28.2 sen-27.5 sen, from 24.7 sen-25.3 sen.”
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) also did not discount that there could be more volatility to the market as the full impact of the Covid-19 pandemic to the economy and corporate earnings becomes more apparent.
“This should benefit Bursa especially its trading revenue,” MIDF Research noted. “The uncertainties surrounding the global economy may lead to higher volatility in the market.
“As evidenced by 1QFY20, higher volatility could mean higher revenue for Bursa, and be er earnings.”
As such, MIDF Research also revised its FY20 and FY21 earnings forecast upwards by 8.8 per cent and 7.7 per cent respectively to take into account the higher volatility.