Market improving, says Bursa CEO

by **Cals** Mon 04 Apr 2016, 02:03

Market improving, says Bursa CEO

By Ahmad Naqib Idris / The Edge Financial Daily | April 1, 2016 : 10:15 AM MYT

This article first appeared in The Edge Financial Daily, on April 1, 2016.

KUALA LUMPUR: Bursa Malaysia Bhd chief executive officer Datuk Seri Tajuddin Atan said the stock market is seeing a gradual improvement compared to a year ago, as more certainty is seen in the global market, following a rebound in commodity prices.

He said although 2016 will remain a challenging year for the country, there are indicators that conditions are improving.

“We think the market is still challenging in 2016, the volatility will remain. But we are seeing changes in the assumptions that were made earlier, as oil prices rebound and palm oil is expected to recover, moving forward.

“[The] ringgit is also improving. Notwithstanding all those, of late, we see foreign funds coming back, registering inflows of around RM4.8 billion to RM5 billion for the first half of this year,” he told reporters after the exchange operator’s annual general meeting (AGM) yesterday.

At 5pm yesterday, the ringgit strengthened to 3.8995 against the US dollar and traded at 2.8950 against the Singapore dollar. Brent crude oil, which has been trending upwards from around US$27 per barrel since Jan 20 — and hit as high as US$41.79 on March 22 — was at US$39.02 per barrel.

Foreign inflows, Tajuddin said, are expected to continue at this juncture as the trading environment is more conducive now, adding that there are still gems in the stock market, especially those that are benefiting from the volatile exchange rates.

On Bursa’s performance in financial year 2016 (FY16), Tajuddin said most of the 16 analysts covering the company are expecting its revenue to breach the RM500 million mark this year.

For FY15 ended Dec 31, Bursa saw a marginal increase in its net profit to RM198.61 million from RM198.23 million in FY14, on a 3.5% revenue rise to RM487.67 million from RM471.27 million.

Earlier at the AGM, the group’s proposed single-tier final dividend payment of 18 sen per share for FY15 was approved by its shareholders. This brings total dividends paid for FY15 to 34.5 sen; a dividend yield of 4.1%.

The revenue rise in FY15 was due to a significant rise in non-securities trading revenue. As trading revenue fell 3%, contributions from the derivatives and Islamic capital markets rose 22% and 69% respectively.

Tajuddin said the bourse will see further expansion in the current financial year, especially in the derivatives and Islamic capital segments.

“More will be invested in derivatives and Islamic capital markets. We have a few announcements coming up,” said Tajuddin.

While securities trading and related activities remain the major contributors to Bursa’s revenue — as it is with exchanges around the world — Bursa said there has been a trend of diversification of revenue streams and growth of non-trading revenue in recent years, said Tajuddin.