PETALING JAYA: The volatility resulting from geopolitical tensions could drive Bursa Malaysia Bhd
’s equity securities trading earnings in financial year 2026 (FY26) and offset rising cost pressures.
This was reflected in the first quarter financial results ended March 31, 2026 (1Q26) where Bursa’s net profit grew by 6.4% year-on-year (y-o-y) to RM73mil, spurred by a 16.1% y-o-y jump in operating revenue, but partly offset by a 26.4% y-o-y surge in operating expenses.
Average trading value (ADV) for the equity market in the period jumped 27% y-o-y to RM3.34bil.
This enabled the exchange operator to record an expansion of 18.9% in equity trading revenue in 1Q26 and 16.4% y-o-y surge in overall revenue, according to CGS International (CGSI) Research.
The geopolitical conflict in the Middle East, the research house noted, has boosted volatility as investors increased trading activity. It forecast ADV on the local exchange to average RM3bil for 2026 versus RM2.55bil in 2025.
CGSI Research added Bursa and the Securities Commission’s MY Value Up programme to create value would also attract investor interest.
“We think the greater disclosures by most public-listed companies (on their future outlook and strategic plans) required by this programme would attract investors’ interest to these companies, leading to a potential increase in the overall ADV of the equity market.
“In this regard, Bursa would be the biggest beneficiary as 43.9% of its FY25 revenue is generated from trading in the equity market (and this is projected by us to increase to 47% to 49% in FY26-FY28),” the brokerage noted in its latest report on Bursa.
Hence, it has maintained its “add” call on the stock with a target price (TP) of RM10.30 a share. CGSI Research also expects Bursa’s return on equity to expand from 29.9% in FY25 to 36.7% in FY28.
Hong Leong Investment Bank (HLIB) Research pointed out that the Bursa derivatives segment’s performance remained relatively flat y-o-y in 1Q26 despite the average daily contracts volume rising by 5.2% to about 107,500, but counteracted by fewer trading days and lower average revenue per contract.
It anticipates a de-escalation in regional conflicts will revive risk appetite for equities. Expectations are also supported by tailwinds that include the US Federal Reserve cutting rates in 4Q26 and the potential 16th General Election in Malaysia which tends to spur trading activity in the coming years.
“While year-to-date ADV has been robust (RM3.3bil), we feel this is largely baked in considering that Bursa’s current price-to-earnings (PE) valuation is similar to the average during the May to September 2024 upcycle,” HLIB Research stated.
It has retained its “hold” call on the stock with a TP of RM9 a share, valued at 25 times the PE ratio that is tagged to the earnings per share of FY26. HLIB Research noted Bursa’s prospects were already priced into its current share price in the market.
Bursa saw 16 new listings in 1Q26 with total funds raised of RM3.4bil.
The new listing pipeline was strong, thanks to Malaysia’s solid macroeconomic fundamentals, manageable inflation and positive investor confidence.
Much like HLIB Research, AmInvestment Bank Research has maintained its “hold” call on Bursa with a TP of RM8.20 a share on the basis that the exchange operator’s current valuation already reflects any further upside to ADV.
Bursa’s shares closed the trading day at RM8.65.
