KUALA LUMPUR (April 30): Recent announcements such as the East Coast Rail Link (ECRL) and Bandar Malaysia projects’ revival will serve as a catalyst that will stimulate the broader equity market, said Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift.
“The Malaysian economy’s fundamentals are strong and robust, and we remain confident of the country’s resilient growth trajectory,” he said in a statement yesterday.
“Despite external concerns, we will continue to position the exchange for long-term growth by improving operational efficiency, digitalising our services to provide better customer experiences such as our upcoming Central Depository System e-services, and enhancing the capital market’s breadth and depth by introducing new products — ensuring we are well-placed when market sentiments improve.”
Bursa’s net profit fell 26.5% to RM46.86 million for the first quarter ended March 31, 2019 (1QFY19) from RM63.78 million a year ago, on lower contributions across all segments.
This resulted in lower earnings per share of 5.8 sen for 1QFY19 compared with 7.9 sen for 1QFY18. Quarterly revenue also fell 16% to RM126.53 million from RM150.71 million in 1QFY18.
In a separate bourse filing yesterday, the stock market operator said total segment profit for 1QFY19 was RM80.8 million, down 22.6% from RM104.4 million in 1QFY18.
“The securities market recorded a segment profit of RM72.4 million in 1QFY19, down 22.9% from RM93.9 million in 1QFY18, mainly due to lower operating revenue,” it said.
Trading revenue in the securities market dropped 22.6% year-on-year (y-o-y) to RM59 million in 1QFY19, mainly attributed to a lower average daily trading value for on-market trades and direct business trades of RM2.41 billion during the quarter. Trading velocity in the securities market for 1QFY19 was also lower by six percentage points to 29% y-o-y.
Listing and issuer services revenue declined 24.2% y-o-y to RM11.9 million in 1QFY19, mainly due to lower listing as well as perusal and processing fees earned as a result of lower circular submissions and corporate exercises respectively.
At the same time, the derivatives market’s segment profit was 25.5% lower at RM9.9 million in 1QFY19 from RM13.3 million in 1QFY18 due to lower operating revenue.
Bursa said the securities and derivatives markets’ performance in 1QFY19 was influenced by domestic and global developments, concerns of slower economic growth, weaker corporate earnings and palm oil prices.
“These factors, including China’s economic growth, crude oil prices’ movement and the European Union’s plan to ban palm oil usage in European biodiesels, will influence both markets’ performance going forward,” it added.
Muhamad Umar believes these temporary challenges are the impetus that can drive a positive transformation among more agile participants across the broad economy.
This article first appeared in The Edge Financial Daily, on April 30, 2019.