Bursa Malaysia first-half net profit down by 24%

KUALA LUMPUR: Bursa Malaysia Bhd’s net profit in the first half of financial year 2019 fell to the lowest in five years after the bourse emerged as Asia’s worst performer.

However, the stock exchange operator remains confident of an improved performance in the second half, led by the return of foreign investors and stronger initial public offerings.

According to Bursa Malaysia CEO Datuk Muhamad Umar Swift, Malaysia could see the comeback of foreign investors as major central banks globally cut their benchmark interest rates.

“Malaysia has a wonderful story to tell. I believe our market has bottomed out and it is time for Malaysia to be re-rated, ” he said.

Umar also pointed out that there would be stronger initial public offering (IPO) exercises in the second half, amounting to RM15bil in total market capitalisation.

“There are 13 companies approved for listing between the July-Dec 2019 period, of which three are slated for Main Market, seven companies for ACE Market and the remaining three for LEAP Market, ” he said at a media briefing.

In comparison, in the January-June 2019 period, 14 companies went public with a total market capitalisation of RM5.5bil.

Meanwhile, in the second half of 2018, there were 11 new listings with a total market capitalisation of RM883.6mil.

Trading activities in Bursa Malaysia met major headwinds largely as result of negative external developments, weak sentiment and disappointing earnings of corporate Malaysia in recent quarters.

In the January-June 2019 period, Bursa Malaysia’s benchmark index, FBM KLCI, was the worst performer among major Asian indices as it was flattish amid strong performance by major regional indices.

In terms of foreign fund flow, the local bourse recorded a total net foreign outflow of about RM4.7bil in the first half of 2019.

In the second quarter ended June 30, Bursa Malaysia’s net profit dropped by 20.4% year-on-year (y-o-y) to RM46.3mil, as trading activities reduced on the back of rising external vulnerabilities and weaker domestic sentiment.

For context, the average daily value traded for the second quarter of 2019 fell nearly 26% to RM2.02bil, as compared to RM2.73bil in the same period last year.

As a result, the group’s revenue took a beating and was slashed by 11.8% y-o-y to RM123.96mil in the second quarter.

Earnings per share for the quarter under review were 5.7 sen. The stock exchange operator announced a dividend of 10.4 sen for the second quarter.

In the first six months of financial year 2019, Bursa Malaysia’s net profit was lower by 23.6% y-o-y at RM93.19mil, caused by a 14% y-o-y decline in revenue to RM250.49mil.

The major factor that dragged down the group’s revenue was the reduction of 20% or RM28.7mil in securities trading revenue mainly due to lower average daily value on market trades.

Umar said the securities market’s performance in the first half of the year was influenced by both global and domestic developments.

However, despite the external headwinds, he expects the securities market for the second half to be resilient.

“Our markets performed in line with expectations as investors continued to adopt a cautious stance for the first half of the year. Notwithstanding the challenging operating environment, we will forge ahead to build on our strengths such as in the Islamic capital market, which continues to show a positive momentum.

“There are various positive indicators that give us reasons to be optimistic, among them the positive trend in trading among small and mid-cap counters and the encouraging increase in IPOs, which led to the stock exchange occupying the top spot among major Asean bourses in terms of funds raised via IPOs as at the first half, totalling RM1.4bil.

“We are also seeing improvements in foreign direct investments. These are all good opportunities for us to build upon, ” he said.

Source: TheStar