PETALING JAYA: Strong growth in trading activity on Bursa Malaysia has exceeded expectations, with average daily value (ADV) in the first quarter of financial year 2026 (1Q26) coming in well above forecasts, according to Kenanga Research.
The research house said 1Q26 ADV rose to RM3.34bil, beating its estimate of RM3bil by 11%, supported by heightened market volatility amid geopolitical tensions and rising inflation concerns.
The stronger-than-expected ADV was driven by a confluence of factors: including foreign inflows, elevated crude oil prices and broader risk-off sentiment.
On a quarterly basis, ADV climbed 25%, while year-on-year (y-o-y) it surged 27%, reflecting increased trading participation as investors repositioned portfolios in response to external shocks.
Kenanga Research noted foreign funds rotated into Malaysian equities, partly due to outflows from Indonesian markets, which further boosted liquidity.
The research house added disruptions linked to tensions involving Iran, particularly around the Strait of Hormuz, had contributed to spikes in oil prices, fuelling inflationary pressures and market uncertainty. This, in turn, lifted trading activity as investors sought to capitalise on volatility.
With the stronger ADV performance, Kenanga Research estimates that 1Q26 net profit for Bursa Malaysia could reach RM73mil to RM78mil, representing a 24% quarter-on-quarter increase and a 10% rise y-o-y.
Securities-related ADV revenue is expected to account for about half of total operating income, it said. Looking ahead, Kenanga Research expects the elevated trading momentum to persist in the near term before gradually normalising.
“We expect this momentum to spill over into the rest of the year, as the effects of elevated commodity prices and inflationary pressures fester,” it said.
As a result, it has raised its full-year 2026 ADV assumption to RM3.15bil from RM2.85bil, translating into earnings upgrades of 5% for financial year 2026 (FY26) and 2% for FY27.
However, it anticipates some moderation, with ADV projected at RM3.2bil in 2Q26 before easing to an average of RM3.05bil in the second half of the year as market conditions stabilise.
For FY27, Kenanga Research has also slightly increased its ADV forecast to RM3bil, although this remains below 2026 levels as geopolitical risks may subside.
Against this backdrop, the research house upgraded Bursa Malaysia to an “outperform” from “market perform”, with a higher target price of RM9.25 a share from RM8.80. It said investors are likely to favour the exchange’s defensive earnings profile amid ongoing uncertainties.
“We view Bursa as a potential safe haven, allowing investors to capitalise on heightened market volatility while maintaining defensive earnings,” Kenanga Research said, adding the improved earnings visibility could increase the chances of special dividend payouts by the exchange operator.
