Trading activity stays strong

HAVING set an example with a solid rise in profitability in the first quarter of 2026 (1Q26), Bursa Malaysia Bhd says the country’s capital market continues to operate in a resilient domestic environment, supported by steady economic growth and policy clarity.

The exchange’s optimism is understandable, having reported a 6.4% year-on-year (y-o-y) increase in net profit for 1Q26 to RM72.8mil, driven by a 27% jump in average daily trading value (ADV) to RM3.34bil and strong equity trading revenue.

In an exclusive interview with StarBiz 7, Bursa Malaysia says macroeconomic conditions, company valuations and return expectations, sector opportunities, as well as geopolitical developments are among factors driving trading activity.

More importantly, the frontline regulator notes that the improvement in market activity was already evident before the recent Middle East tensions, with ADV rising from RM2.25bil in December 2025 to RM3.2bil in January 2026 and remaining above RM3bil every month since.

Investor confidence remains key

Bursa Malaysia acknowledges that recent geopolitical developments have provided an additional near-term lift, particularly through event-driven positioning and sector rotation, with year-to-date (y-t-d) ADV edging up to RM3.3bil.

It says this suggests that geopolitical volatility has supplied a short-term boost, but is not the sole driver of trading activity.

“The y-t-d trading activity has also been supported by blue-chip stocks, reflecting continued investor confidence in Malaysia’s macroeconomic and corporate performance.

“It has also benefitted from increased interest in technology stocks, as the ongoing AI ­investment cycle supports demand across the broader ­semiconductor supply chain, including Malaysian technology companies,” the exchange highlights.

With gross domestic product projected at 4% to 5%, Bursa Malaysia believes this provides a constructive foundation for sustained participation.

It is also seeing healthy engagement across both retail and institutional segments, with retail contributing around 30% of trading activity, alongside a strong domestic institutional base that supports market depth and stability.

IPO goals on track

In addition, Bursa Malaysia says that while operating revenue has benefitted from stronger equity trading activity, it has continued to maintain a disciplined approach in a rising cost environment.

“Our focus is on prioritising investments in talent and technology to support growth and strengthen the resilience of our market infrastructure.

“These targeted investments are designed to drive long-term value, support more diversified and sustainable revenue streams, and enhance market vibrancy,” it says.

More immediately, the exchange says momentum for initial public offerings (IPOs) has remained firm, building on a record 2025.

As at end-May 2026, it has recorded 29 IPOs with a total market capitalisation of about RM25.4bil, including listings such as Sunway Healthcare Holdings Bhd, MTT Shipping and Logistics Bhd, and Skyechip Bhd, with additional Main Market listings in the pipeline.

“This continued pipeline provides a strong foundation towards achieving the RM28bil IPO market capitalisation target for 2026,” it added.

Broader investor participation

Looking ahead, Bursa Malaysia says while recent increases in trading volumes reflect a combination of factors, they point more crucially to a gradual structural strengthening in market vibrancy, rather than being driven purely by geopolitical developments.

It points out that this is supported by ongoing, system-wide efforts under the Capital Market Masterplan 2026–2030 (CMP) aimed at improving participation, visibility and price discovery across the market.

A core initiative under the CMP is the on-the-ground MY Value Up programme, designed to translate the masterplan’s vision into actionable improvements for listed companies, ultimately helping to expand and strengthen Malaysia’s capital market.

Essentially, MY Value Up is a voluntary national initiative aimed at helping listed companies strengthen investor engagement and position themselves as more attractive investment propositions globally.

“A key focus under MY Value Up is encouraging listed companies to strengthen long-term value creation, capital allocation discipline, and investor communication.

“This helps address gaps in investor relations coverage, limited analyst visibility, and inconsistencies in communicating growth and earnings outlook. As these improve, they support stronger investor conviction, more informed participation, and better price discovery over time,” says Bursa Malaysia.

The exchange says these efforts are complemented by initiatives such as the Bursa Malaysia Quality Index, which highlights fundamentally strong companies, and Bursa RISE+, which raises the visibility of under-researched names, broadening investor interest beyond large caps.

At the same time, it is expanding regional connectivity, with its collaboration with Hong Kong Exchanges and Clearing Ltd (HKEX) leading to the launch of a co-branded large-cap index and the development of exchange-traded funds.

HKEX is Bursa Malaysia’s counterpart in Hong Kong and operator of the Stock Exchange of Hong Kong, one of the world’s largest exchange groups by market capitalisation and a leading IPO venue for Chinese and international companies.

Bursa Malaysia says: “Encouragingly, the HKEX–Bursa Malaysia Large Cap Index has outperformed both the FBM KLCI and Hang Seng Index on a three-year annualised basis, indicating growing investor interest in cross-market exposure.”

Nevertheless, the exchange says domestic fundamentals remain an important anchor, as Malaysia’s economic growth supports earnings expansion and investor confidence, while initiatives such as Visit Malaysia 2026 are expected to benefit sectors like tourism, aviation and retail, with broader spillover effects.

Analyst views

Bursa Malaysia says: “Overall, while market performance – including the FBM KLCI – will continue to reflect both domestic and external conditions, the improvement in participation, visibility and connectivity points to a more structural strengthening of the market.

“This provides a more supportive foundation for sustained performance over time.”

Analysts are generally split between “neutral” and “buy” calls on Bursa Malaysia.

While acknowledging the counter’s strong outlook, Hong Leong Investment Bank Research and MBSB Research are maintaining “neutral” calls, citing that positives have largely been priced in.

Other brokerages, including RHB Research, CGS International Research and TA Research, maintain “buy” calls, pointing to a strong IPO pipeline, higher ADV and return-on-equity projections as key tailwinds for the counter.