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Higher equity trades seen booming Bursa profit in 2Q 2020

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KUALA LUMPUR 6 July -  Maybank Investment Bank Research (Maybank IB) raises earnings forecast of Bursa Malaysia to incorporate the strong second quarter of 2020.

The Bursa Malaysia's revenue of financial year 2020 earnings is presumably set at RM605 million compared to last year’s financial end earnings at RM502 million. 

The equity trades are also expected to vibrant for the second half of the same year and beyond. 

Bursa Malaysia’s equity trades in May and Jun 2020 have been exceptionally strong, driven by high retail participation.

Equity average daily value (ADV) of the exchange holding company surged to RM4.4 billion in May and RM4.67 billion in June, from RM2.66 billion in April (1Q20: RM2.58 billion). 

This was on the back of high retail participation in April (35% of total trades), rising to 36.2% in May and 37% in June (1Q20: 26.9%). 

“Our earlier equity ADV assumption of RM2.3 billion for financial year 2020 earnings (FY19: RM2.15 billion) is no longer realistic in light of the strong second quarter of this year.

“We now forecast RM2.9 billion ADV for financial year 2020 earnings, assuming RM2.8 billion in the third quarter and RM2.5 billion in the fourth quarter of 2020,” said Maybank IB. 

However, derivative trade volume tapered to 1.5 million in April and further to 1.03 million in May, from a record high of 2.13 million in March (1Q20: 5.39 million).

Meanwhile, the stock traders are encouraged to maintain hold as Bursa Malaysia’s price is expected to increase by 3% at RM7.55 from RM7.32.

Bursa Malaysia opened higher today to continue last week's upward momentum.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) at 9.05 this morning improved by 3.52 points to 1,556.17 from Friday's close of 1,552.65.

At the same time, the index opened 1.14 points higher at 1,553.79. - DagangNews.com