Bursa Malaysia 1Q20 earnings likely to impress, says Alliance DBS

File picture shows an investor monitoring stock prices in the gallery of the RHB Investment Bank Bhd headquarters, July 16, 2018. — Bernama pic
File picture shows an investor monitoring stock prices in the gallery of the RHB Investment Bank Bhd headquarters, July 16, 2018. — Bernama pic

KUALA LUMPUR, April 9 — Bursa Malaysia is expected to record impressive first quarter results supported by strong performance in the equity and derivatives markets, says Alliance DBS.

In a note today, it said the average daily value traded (ADVAL) was at a five-year high, while volatile crude palm oil (CPO) prices and the KLCI Index helped drive up their respective futures volumes to multi-year peaks.

“Against a backdrop of volatile commodity prices and the ongoing COVID-19 pandemic, the equity market charted a six-year high in 1Q20 at 3.3 billion average daily volume traded (ADVOL) while ADVAL was robust at RM2.5 billion.

“Considering its 50 per cent contribution to overall revenue, this will positively skew Bursa Malaysia’s 1Q20 earnings,” the research house said.

Alliance DBS said volatile prices and the index’s performance bode well for derivatives.

It also foresees trading activity moderating ahead of lower foreign participation but still supported by sentiment on the planned resumption of major infrastructure projects and economic recovery in the latter part of the year.

It said it believes the exchange’s valuation remains compelling for a stock with consistent dividends and a recurring revenue stream.

“We are more optimistic on Bursa Malaysia’s prospects in financial year 2021 forecast (FY21F) and FY22F on assumption of sentiment improving after the COVID-19 fallout dissipates over time, supported by government stimulus and economic recovery,” it said.

The research house has maintained a “buy” call on the exchange with a lower target price of RM6.

At 3.45 pm, shares of Bursa Malaysia rose 13 sen to RM5.23 with 1.42 million shares transacted. — Bernama

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