PETALING JAYA: With the average daily value (ADV) of the local equity market having exceeded expectations, UOB Kay Hian (UOBKH) Research has revised Bursa Malaysia’s ADV forecasts for 2024 and 2025 upward to RM3.1bil and RM2.7bil, respectively, from RM2.8bil and RM2.5bil.
This adjustment positions the research firm’s latest ADV assumptions significantly above consensus forecasts of RM2.3bil to RM2.8bil for 2024.
“Bursa’s ADV has continued to exceed expectations, with a year-to-date average of RM3.1bil surpassing our initial 2024 assumption of RM2.8bil.
“The current equity ADV upcycle is only six months old, compared with historical upcycles lasting six to 18 months. Therefore, we remain optimistic on Bursa’s near to medium-term prospects, which prompt us to raise our ADV assumptions,” UOBKH Research said in a report.
The research house said recent economic data in the United States bolstered expectations for an interest rate cut later this year.
“The eventual Federal Reserve interest rate pivot is a key underlying catalyst to help sustain net foreign inflows into Bursa and consequently overall market sentiment and ADV.
“After two consecutive months of net selling, foreign investors became net buyers in May 2024 with net inflows of RM1.5bil, reversing the RM1.4bil net outflows in April. As a result, the cumulative net foreign outflow for the five months of 2024 decreased to RM0.8bil,” it said.
The research house maintained a “buy” call on Bursa Malaysia Bhd
with a higher target price of RM9.42, up from RM8.76 after an earnings adjustment.
It said the stock’s share price could potentially peak above RM10 if the current equity market ADV continues into late-2024 and early next year.
The stock closed at RM8.83 last Friday, translating into a market cap of RM7.15bil.
