KUALA LUMPUR: The local bourse is hopeful of higher trading activity as the economy re-opens with the National Recovery Plan, said Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar.
Abdul Wahid noted that in July, the average daily trading value (ADV) dropped to RM3bil compared with RM4.4bil in the first half of 2021.
“This level is still significantly higher than the RM1.9bil per day in 2019 that we enjoyed before the Covid-19 pandemic.
“As the economy reopens, hopefully that will bring back more trading activities,” he said in an online media briefing after the exchange’s release of its record financial results for the the first half ended June 30, 2021 (H1FY21).
Bursa Malaysia CEO Datuk Muhamad Umar Swift pointed out that ADV had moderated in July and the “market is moving sideways.”
“That needs to be seen in context, as the National Recovery Plan is rolled out, as vaccinations are rolled out, and companies return to profitability.
“That should then be reflected in results and market sentiment,” said Muhamad Umar.
Abdul Wahid added that the challenges arising from the Covid-19 pandemic are likely to continue for at least in the short term.
“We expect trading on the stock market to continue to remain vibrant, supported by active retail participation and high volatility.
“The exchange will continue with ongoing initiatives to attract investments and sustain retail participation,” he said.
Abdul Wahid pointed out that retail participation had increased to 38% in 2020, from 25% in 2019.
“Retail participation was 39% in the first half of this year.
“About 70% were locals in 2019, and this increased to 83% in 2020 and in the first half as well.
“We have seen more registrations or account openings among the young,” he said.
For its second quarter ended June 30, 2021 (Q2FY21), Bursa Malaysia posted a 3.2% year-on-year (y-o-y) rise in net profit to RM89mil, while revenue was up 9.1% to RM196.1mil.
For the first half under review (H1FY21), the exchange’s net profit jumped 39.4% y-o-y to RM210.4mil while revenue was 29.6% higher to RM428.4mil.
Earnings per share was 26 sen in H1FY21, compared with 18.7 sen a year earlier.
The exchange declared an interim dividend of 24 sen per share, payable on August 27, 2021 – representing a dividend payout ratio of 92.3%.
In a statement, Abdul Wahid pointed out that this was the exchange’s highest ever first half-yearly financial performance since its listing in 2005.
In H1FY21, trading revenue from the Securities Market increased by 41.4% to RM266.1mil (from RM188.2mil a year ago) due to a higher ADV of RM4.4bil.
Meanwhile, the Derivatives Market trading revenue decreased by 6.4% to RM44.9mil in H1FY21 (from RM48mil a year ago) mainly due to lower collateral management fees earned after the reduction of the collateral management fee rate to 0.5% effective July 2020, and lower fees earned from the drop in FTSE Bursa Malaysia KLCI Futures (FKLI) contracts in the first half of 2021.
Spurred by growth in the volume of crude palm oil futures, average daily contracts for the derivatives market increased slightly by 4%, with 80,061 contracts traded in 1HFY21 (compared to 76,956 a year ago).
On the Islamic market front, Bursa Suq Al-Sila’ trading revenue increased by 5.8% to RM6.7mil in H1FY21 (from RM6.3mil a year ago).
The exchange stated that trading activity on Suq Al-Sila’ is expected to sustain its momentum supported by local participants as well as attracting more foreign participants to trade on its platform.
Abdul Wahid added that the exchange had recently strengthened its Islamic market capabilities and sustainability solution by introducing the FTSE4Good Bursa Malaysia Syariah index.
“The exchange also welcomes the addition of the world’s first Syariah-compliant China A-Shares exchange traded fund,” he said.
Muhamad Umar also said in the coming months, the exchange will introduce the after-hours (T+1) trading session for the Derivatives Market (Night Trading).
“The launch of Night Trading will offer greater accessibility and enhance the attractiveness of the Malaysian derivatives market to global players,” he said.