PETALING JAYA: Bursa Malaysia may see lower market velocity than previously expected in the financial year 2027 (FY27), amid more cautious trading sentiment ahead of a possible general election, according to CGS International (CGSI) Research.
In a note, the research house said its earlier assumptions of 38% market velocity for Bursa in FY27 to FY28 would not be attainable under these circumstances, and has now trimmed its forecast to 34%.
As a result, it has cut its FY27 to FY28 average daily value (ADV) forecasts by 10% to 11%, and consequently lowered its projected FY27 to FY28 net profit by 10% to 11%.
Nevertheless, the research house said it believes Bursa is on course to reach double-digit year-on-year (y-o-y) ADV growth in 2026, given the strong ADV expansion in the first nine months of the year (9M26).
“We still project increasing equity ADV in 2026 to 2027, albeit now by a lower growth rate in FY27.
According to CGSI Research, Bursa’s 9M26 earnings came within its expectations, at 72% of its full-year forecast and 75.6% of the Bloomberg consensus estimates.
Net profit in 9M26 grew by 13.5% y-o-y, underpinned by a 19.5% y-o-y rise in revenue, largely lifted by robust equity market ADV.
Equity ADV increased by 27.6% y-o-y to RM3.19bil in 9M26, which enabled Bursa’s equity trading revenue to expand by 22.8% y-o-y during this period, the research house said.
Additionally, average daily contracts (ADC) in the derivative market reached a record high 125,000 units in the third quarter (3Q26), representing a 37.4% y-o-y increase.
“This was primarily driven by ADC for Crude Palm Oil Futures, which we estimate rose 42.6% y-o-y in 3Q26,” CGSI Research said.
Bursa’s derivative income growth, as a result, accelerated to 32.2% y-o-y in 3Q26, compared to 14.1% y-o-y in 9M26, it added.
The research house maintained its “add” call on Bursa on higher projected equity ADV in FY26 to FY27 and expected return on equity (ROE) expansion over FY25 to FY28.
Given the lowered net profit forecasts, it has revised its dividend discount model-based target price down from RM11.80 to RM10.
It noted that ROE expansion, which it estimates to rise from 29.9% to 37.7% in FY25 to FY28, and robust ADC in the derivative market would offer potential rerating catalysts for Bursa.
Meanwhile, downside risks include a sudden pullback in equity ADV and higher-than-expected increases in operating expenses, it said.
