Bursa Malaysia expects more subdued capital market in second half of the year

KUALA LUMPUR: Bursa Malaysia Bhd, which posted its best first half performance in nine years for the period ended June 30, 2017 (1H17), expects the capital market to see continued momentum in 2H17 but cautioned that it may not reach the levels of 1H17.
Bursa Malaysia CEO Datuk Seri Tajuddin Atan said global recovery in developed and emerging markets will fuel the continued momentum in 2H17.
“I believe the positive momentum will still continue notwithstanding some correction in between. Whether it will be as strong as 1H17, I won’t say it’ll lead to the same levels, but looking at the data and charts, I believe it’ll continue to maintain its momentum,” he told a media and analyst briefing after announcing its second quarter results yesterday.
Stronger domestic trade contributed to a 30.8% increase in the average daily trading value for the securities markets on-market trades to RM2.5 billion in 1H17.
Tajuddin said the bourse is seeing trickling amounts of foreign inflows after it increased RM10.7 billion in 1H17 to RM11.2 billion.
He said Bursa Malaysia will require a yet-to-be identified amount of capital expenditure to upgrade its clearing system​, depository and surveillance systems.
Its cash and bank balances stood at over RM330 million, which Tajuddin said will be sufficient to cover the system enhancements.
Meanwhile he said the newly launched Leading Entrepreneur Accelerator Platform (LEAP) is not meant to generate revenue currently, but it will provide the visibility for SME firms to be part of the pipeline for potential initial public offerings (IPOs).
“The exchange can do this because we’ve the infrastructure, technology and know-how. It’s not going to cost us a lot of money, “ said Tajuddin.
He expects the number of IPOs this year to be slightly more than the mid-teens after 1H17 saw eight IPOs that raised RM3.5 billion.
On cyber attacks, which led to distributed denial-of-service (DDoS) suffered by several brokerages in their online broking services earlier this month, Tajuddin assured that the exchange is engaging with brokers to address the issue.
Bursa Malaysia’s Q2 net profit rose 20.3% to RM59.54 million from RM49.48 million a year ago, mainly thanks to higher securities trades.
Its revenue jumped 10% to RM142.67 million compared with RM129.72 million in the previous corresponding quarter.
For 1H17, Bursa Malaysia saw a record net profit since 2008, registering RM116.17 million from RM99.41 million a year ago, representing a 16.9% jump thanks to higher trades in the securities market.
Its revenue of RM285.37 million was also a record half year revenue since its listing in 2005. It rose 8.2% from RM263.65 million in the previous year’s corresponding period.
The exchange also declared an interim and special dividend of 20 sen and 15 sen per share. Bursa Malaysia closed 2.54% higher at RM10.50 yesterday with 781,000 shares traded.