Affin Hwang said Bursa Malaysia’s initial public offering pipeline remains robust with two mega listings – Sunway Healthcare and MMC Port – slated for 2026.
PETALING JAYA: Stock exchange operator Bursa Malaysia Bhd
is set to deliver a “solid” sequential earnings rebound in the third quarter of 2025 (3Q25), on the back of higher trading value that is led by local institutional investors.
Affin Hwang Investment Bank Research, which upgraded its rating to “buy”, has forecast Bursa Malaysia to deliver a 23% quarter-on-quarter (q-o-q) growth in 3Q25 net profit to RM70mil.
Revenue, meanwhile, is expected to grow by 13% q-o-q to RM189mil in the July to September 2025 period.
Bursa Malaysia is scheduled to announce its results tomorrow.
“For 2025 to 2027, we turn more constructive and expect a higher level of profitability for Bursa Malaysia in light of rising investor interest and the potential return of foreign flows amid a global easing rate cycle, which is expected to drive the equity average daily value (ADV) to RM2.7bil-RM3.1bil per annum.”
It is worth noting that the equity ADV jumped 21% q-o-q in the third quarter of 2025 to RM2.9bil, although on a year-on-year basis, it was down 24% due to a high-base effect.
Local institutional investors’ trading value in the third quarter rose higher by 31% q-o-q.
Affin Hwang also foresees the global easing cycle to drive asset price reflation, and pointed out the Malaysian equities remain attractive amid the net foreign fund outflows worth over RM18bil year-to-date.
“The anticipated Federal Reserve rate cuts could narrow interest rate differentials, potentially prompting fund rotation from the US into emerging markets, with Malaysia standing to benefit.
“Meanwhile, the widening yield gap between the FBM100 earnings yield and Malaysian Government Securities yield also suggests increasing relative appeal for equities over bonds.”
In addition, the research house said Bursa Malaysia’s initial public offering pipeline remains robust with two mega listings – Sunway Healthcare and MMC Port slated for 2026, should also help to lift non-trading fee income.
“Our in-house strategy continues to overweight Malaysian equities, with 10 sectors currently rated as ‘overweight’.
“All in all, we turn more constructive on Bursa’s earnings outlook and raise our equity ADV assumptions for 2025/2026/2027 from RM2.6bil/RM2.8bil/RM2.9bil to RM2.7bil/RM3.1bil/RM3.1bil.”
Affin Hwang added that its earnings forecasts have been increased by 2.4% to 10.3% after incorporating higher equity ADV assumptions.
Backed by the positive outlook, Affin Hwang has raised its target price for Bursa Malaysia to RM9.35 per share, which is a significant increase from RM7.50 previously.
It assumed a target price-to-earnings ratio of 25 times on a higher 2026 earnings per share of 37.4 sen from 34 sen.
That said, downside risks for Bursa Malaysia’s prospects are higher fund outflows and rising geopolitical risks.
On the recently formalised Malaysia-US reciprocal trade agreement, Affin Hwang viewed the development positively, highlighting that it helps to alleviate near-term investor concerns over trade disruptions.
“And this agreement should also help support a constructive outlook for the ringgit, as well as the continued investment flows into Malaysia.”
On Oct 26, the United States officially inked a reciprocal trade agreement with Malaysia, which sets a lower 19% reciprocal tariff on Malaysia (from an earlier 25%), while exempting 1,711 export products worth US$5.2bil (approximately 12% of total exports).
“We believe market confidence has been gradually restored amid easing trade uncertainties,” stated Affin Hwang.
