Challenges seen in Bursa’s securities market ADV

by **Cals** Wed 27 Jan 2016, 20:40

Challenges seen in Bursa’s securities market ADV

By MIDF Research / The Edge Financial Daily | January 27, 2016 : 10:24 AM MYT

This article first appeared in The Edge Financial Daily, on January 27, 2016.

[size=16]Bursa Malaysia Bhd ([You must be registered and logged in to see this image.] Valuation: 1.70, Fundamental: 2.30)
(Jan 26, RM8.30)
Maintain buy with an unchanged target price of RM9.45: Bursa Malaysia Bhd is scheduled to release its fourth quarter of financial year 2015 ended Dec 31, 2015 (4QFY15) results on Feb 2.

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We expect Bursa’s 4QFY15 profit after tax and minority interests to come in at about RM56.3 million from RM53.1 million in 4QFY14 and RM51.5 million in 3QFY15, which will translate into +6% year-on-year (y-o-y) and +9% quarter-on-quarter (q-o-q) growth.

The expected improvement in its earnings will largely be due to a recovery in the average daily value (ADV) traded for the securities market, compared to the preceding quarter.

We anticipate its cumulative earnings for FY15 to fall in the proximity of our full-year forecast of RM204.3 million.

Based on our channel checks, the ADV traded in 4QFY15 increased to RM2.03 billion (+7.6% y-o-y and +6% q-o-q).

We opine that the upturn in the ADV traded was due to bottom-fishing activities in the securities market after heavy sell-offs in 2QFY15 and 3QFY15, as well as due to window dressing at the end of the year.

Having said that, we foresee some challenges in securities market ADV this year precipitated by cautious investors’ sentiment, due to slumping oil prices and concerns about global economic slowdown.

We understand that derivatives traded in 4QFY15 had marginally grown to 55,883 contracts from 54,279 contracts in 4QFY14.

However, it was lower compared with 61,692 contracts in 3QFY15. This was due to lower volatility in crude palm oil prices and the FBM KLCI in 4QFY15.

We make no changes to our full-year forecasts at this juncture pending the release of the results on Feb 2. — MIDF Research, Jan 26
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