Active retail participation & high volatility drive Bursa record 1H earnings

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According to Bursa Malaysia Bhd Chairman Tan Sri Abdul Wahid Omar, the exchange expects trading on the stock market to remain vibrant, supported by active retail participation and high volatility in the market. The challenges arising from COVID-19 are likely to continue for at least in the short term, hence the exchange would continue with ongoing initiatives to attract investments and sustain retail participation in its market. Speaking at the virtual media briefing of Bursa Malaysia’s first half (H1) financial performance today, he said the high average daily trading value (ADV) momentum of 2020 continued into the H1 of 2021 with ADV increasing by 4.9% to RM4.4 billion. This contributed to the exchange recording a profit after tax of over RM210 million, a 39.4% increase from the previous corresponding period in 2020, and was also the highest ever half-year financial results since listing back in 2005. 

The global risk-off sentiment that has spurred an outflow by foreign investors from equities is not unique to Malaysia as this was also experienced by other emerging markets in ASEAN. Nonetheless, Malaysia is well positioned for recovery, following the eight COVID-19 fiscal stimulus programmes amounting to RM530 billion as well as the accommodative interest-rate levels have been crucial in supporting the economy. There are three potential upsides to support this view Firstly, Bursa Malaysia’s market valuation, with its forward price-to-earnings ratio of 13.3 times being the lowest in the region, makes it an attractive recovery play over the next few months. Secondly, Bursa Malaysia’s initial public offering (IPO) pipeline continues to remain healthy across all three markets, having sustained from the strong momentum last year. Year-to-date, there have been 20 new listings from the target of about 31 new listings this year, which include the recent RM1.21 billion listing of CTOS Digital Bhd, the largest IPO this year. And thirdly, the recovery in domestic and major economies appears to be on track, with the ramped-up vaccination rates seen in recent times and the implementation of the National Recovery Plan would facilitate the reopening of the economy.  

Meanwhile, according to Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift, various relief measures and incentives have been introduced to support listed issuers amidst these challenging times. The exchange will continue to enhance its platform to support the investing community in growing their wealth and managing risk against volatilities. Last May, the exchange launched the Pilot Market Making Program which aims to provide greater liquidity for less traded and illiquid stocks in the marketplace. Net profit rose to RM88.97 million in the second quarter ended June 30, 2021 (Q2 2021) from RM86.23 million in the same quarter last year. Revenue increased to RM196.10 million from RM179.78 million previously. In the coming months, Bursa Malaysia will introduce the after-hours (T+1) trading session for the derivatives market (Night Trading), which will offer greater accessibility and enhance the attractiveness of the Malaysian derivatives market to global players. 

PPI for local production up 11.5% y-o-y in June — Dept of Statistics 

According to Department of Statistics Malaysia chief statistician Datuk Seri Dr Mohd Uzir Mahidin, the Producer Price Index (PPI) for local production increased 11.5% year-on-year (y-o-y) in June 2021, marking the fifth consecutive month of an upward trend. The mining index increased 64.4% due to higher prices of natural gas, as well as a continuous increase for crude petroleum. The index of agriculture, forestry and fishing inclined at a slower pace of 29.8% because of lower prices of crude palm oil (CPO) and livestock. In addition, the manufacturing index, which was influenced by a rise in prices of primary and construction-related commodities, also showed a significant increase of 6.7%. In terms of the utility indices, water supply rose 1.6%, while electricity and gas supply declined 0.2%. On a monthly basis, the PPI for local production registered a marginal increase of 0.2% in June 2021, compared with 1% in the previous month, in which the increase was supported by the indices of mining (8.2%) and manufacturing (0.8%). However, the agriculture, forestry and fishing; electricity and gas supply; and water supply indices declined 10.5%, 0.8% and 0.2% respectively. Meanwhile, the PPI for local production in the second quarter of 2021 (2Q21) rose 11.3% to 111.3 from 100.0 in the same quarter of the previous year. The increase was contributed by the index of mining (74%), agriculture, forestry and fishing (46%), manufacturing (5%) and water supply (1.4%), while that of electricity and gas supply declined 0.3%. On a quarterly basis, the PPI for local production rose 2.6%, compared with 5.1% in 1Q21. The PPI for local production for all stages of processing recorded an increase in prices for June 2021. The index of crude materials for further processing increased 39.2%, compared with 53.6% in the previous month. The index of intermediate materials, supplies and components also increased 9%, while the finished goods index edged up 0.3%. 

Eye On The Markets 

This week, on Friday (30July), the Ringgit opened 4.2375 against the USD from 4.2285 on Monday (26July). Meanwhile, the Ringgit was 3.1297 to the Sing Dollar on Friday (30July). On Monday (26July), the FBM KLCI opened at 1524.47. As at Friday (30July) 10:00am, the FBM KLCI is down 16.39 points for the week at 1508.03. Over in US, the overnight Dow Jones Industrial Average closed up 153.60 points (+0.44%) to 35,084.53 whilst the NASDAQ added 15.70 points (+0.11%) to 14,778.30.  

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Site last updated September 24, 2021 @ 4:40 am; This content last updated July 30, 2021 @ 5:00 am