It said in a note that it was reducing its expectations on BURSA MALAYSIA BHD for FY19 given the soft average daily volume (ADV) figures.
The research house maintained market perform on the counter with a lower targer price of RM6, from RM6.85 previously.
Going by Bloomberg data, 3Q19 recorded securities ADV of RM1.84bil, which was weaker than 1HFY19 ADV of RM2.04bil, possibly owing to earlier paring down of contract values of various mega projects, ongoing disruptive trade wars and local currency weakness.
"Although the recently tabled Budget 2020 was generally positive for the market, we reckon that it was not enough to propel 2HFY19 ADV close to the prior period.
"This is due to the lingering pessimism as well as slowing participation of foreign investors," said Kenanga.
Moving into FY20, the research house is hopeful for some improvement when the trade war pressively eases.
However, it said the local market could still be tepid on the back of a sluggish ringgit and if the current US$60 a barrel level of Brent crude persists.
Positive catalysts could come in the form of the return of foreign investors and the potetial revival of infrastructure projects.
"Post-model updates, we cut our FY19E/FY20E earnings by 7%/13% mainly from downside adjustments to our ADV expectations.
"We had previously anticipated 2HFY19 ADV to clock in at c.RM2.6b, but now skim it to c.RM1.9b which we think is a more realistic level.
"We also shave our FY20E ADV assumptions from RM2.3b-RM2.8b a quarter to a full-year average of c.RM2.0b, being a 5% YoY growth in line with our views above," it said.
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