Bursa to rely on local support this year

by **Cals** Fri 18 Apr 2014, 12:26

Business & Markets 2014

Written by Levina Lim of theedgemalaysia.com

Friday, 18 April 2014 09:44

KUALA LUMPUR: Bursa Malaysia Bhd, which saw its first quarter 2014 net profit jump 18% year-on-year, expects domestic retail to improve and local institutions to continue to support the equity market this year.
“While we see opportunities for growth in Asean retail and foreign fund participation, crucial to the growth of our market in the current economy are our outreach activities as well as the ability to provide diversified and investable products to existing and potential investors,” the stock exchange operator said in a filing with the exchange yesterday.
Bursa also sees the unpredictable weather patterns, which will affect palm oil prices, to continue to affect the trading of its two key contracts on the derivatives market — the FTSE Bursa Malaysia KLCI Futures (FKLI) and crude palm oil futures (FCPO) contracts.
“[However,] our efforts to deepen our distribution channels, promote our existing products and widen our range of derivatives offerings are expected to improve the volume traded this year,” it said.
“While being cognisant of the impact of external events on our performance, we remain focused in developing our securities, derivatives and Islamic markets,” Bursa added.
Bursa posted a net profit of RM45.15 million for the first quarter ended March 31, 2014 (1QFY14) from RM38.2 million a year ago, on higher revenue.
Earnings per share improved 18% to 8.5 sen from 7.2 sen. On an annualised basis, the return on equity grew to 23% in 1QFY14, up five percentage points from 18% in 1QFY13.
Bursa’s revenue was up 12% to RM123.17 million in 1QFY14 from RM110.44 million, boosted by double-digit growth in trades from the securities and derivatives market.
As at March 31, 2014, market capitalisation of Bursa stood at RM1.7 trillion, up 17% year-on-year, while trading velocity for 1QFY14 improved by two percentage points to 30% from a year ago.
“Despite an increase in the operating expenses of 10% due to higher investment in talent, the cost-to-income ratio was optimised at below 50%,” said Bursa.
For 1QFY14, the securities market’s average daily trading value (ADV) grew by 26% to RM2.16 billion as a result of higher trading participation from retail investors due to the stock market operator’s targeted outreach activities and continued support by domestic institutions.
“The derivatives market’s average daily contracts grew by 11% to 50,046 contracts, largely driven by the increase in the activities of the FCPO contracts,” said Bursa.
The FCPO contracts hit a new high on March 12, with 71,678 contracts traded on the back of higher volatility in crude palm oil prices.
From the Islamic market perspective, Bursa said Bursa Suq Al-Sila (BSAS) recorded a 40% increase in its ADV to RM5.1 billion on the back of higher domestic and foreign participation due to the consistent engagement and outreach activities undertaken.
Moving into the new quarter, Bursa chief executive officer Datuk Tajuddin Atan said the stock exchange will unveil several initiatives as part of its efforts to engage younger Malaysians between the ages of 25 and 35.
“In the pipeline is the launch of our e-initiative, a digital and inclusive platform to grow retail participation through the offering of accurate and objective information.
“We are also working towards initiating the environmental, social and governance (ESG) index to improve our visibility in the regional space,” he added.

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This article first appeared in The Edge Financial Daily, on April 18, 2014.