The Borneo Post (Sabah)
Bursa’s ADV could grow in 2H on possible election
LUMPUR: Bursa Malaysia Bhd’s (Bursa Malaysia) average daily volume is expected to so en quarter-on-quarter (qo-q) in the second quarter of 2021 (2Q21) before gaining momentum in the second half of 2021 (2H21), driven by the possible end of the state of emergency and the possibility of a general election.
Hong Leong Investment Bank Bhd’s research team (HLIB Research) noted that generally, 2021 is expected to be a vaccineled recovery year for Bursa Malaysia but it pointed out that there could still be speedbumps in its recovery such as vaccine hiccups, a Covid-19 resurgence, geopolitical tensions, and other domestic political agendas that could bring volatility into the market.
“Timeline wise, we expect ADV to so en q-o-q in 2Q21 but regain momentum in 2H21 as ‘election trading’ sets in, particularly amongst local investors, taking cue from the ‘state of emergency’ which is slated to end on August 1,” it opined.
All in, it pencilled in ADV of RM3.43 billion for FY21, which is lower than FY20’s exceptional RM4.21 billion but still much better than the pre-Covid highs of RM2.3 billion to RM2.4 billion (FY17 to FY18).
On Bursa Malaysia’s performance for 1Q21, HLIB Research believed that its performance for 1Q might be lower q-o-q but significantly higher y-o-y.
“Judging from 1Q21 ADV of RM5.08 billion (up 5.2 per cent qo-q, up 100.8 per cent y-o-y) and ADC of 79,900 (up 12.5 per cent q-o-q, down 7.1 per cent y-o-y), and barring any unforeseen swings in cost structure, we estimate that core earnings for the quarter could come in at RM108 million (forming 35 per cent of our initial FY21 earnings forecast and 32 per cent of consensus).
“If met, this implies a 7.9 per cent q-o-q dip in core earnings as higher ADV/ADC (up 5.2 per cent/up 12.5 per cent) is more than offset by fewer trading days (60 in 1Q21 compared with 64 in 4Q20),” it explained, noting that core earnings in 4Q20 of RM117.4 million is derived after removing RM12.5 million in SST provisions.
On a y-o-y basis, its 1Q21 core earnings estimate suggests a 66.9 per cent jump as ADV doubled.
On retail participation, HLIB Research believed that retail participation is now on a structurally higher base with the average participation rate at 39.6 per cent post automatic loan moratorium compared with the 10-year pre-Covid mean of 24 per cent.
“In our view, this should lend some downside support to the market,” it opined.