Inve$t | Market Sentiments | 24 March 2023
Bursa Malaysia Berhad held its 10th annual Bursa Excellence Awards 2022 ceremony on 20 March 2023 to honour outstanding performance of brokers and market intermediaries in the Malaysian capital market. Themed “Recognising Excellence, Celebrating Success”, a total of 54 accolades spanning 24 categories in the Securities, Derivatives and Islamic markets were awarded.
According to Tan Sri Abdul Wahid Omar, Chairman of Bursa Malaysia said, in 2022, the Exchange witnessed active trading of securities, at an Average Daily Trading Value of RM2.1 billion. Initial public offerings in 2022 were strong and vibrant. There were 35 IPOs in 2022, the highest on the Exchange since 2007, which raised a total of RM3.5 billion and contributed RM11.15 billion to the overall market capitalisation of RM1.74 trillion.
The derivatives market, on the other hand, recorded an all-time high in trading volume last year, achieving a record high of 19.1 million contracts traded in 2022, surpassing the previous high of 18.4 million contracts registered in 2021. Meanwhile, the Commodity Murabahah platform Bursa Suq Al-Sila performed similarly well in the Islamic Capital Market, with 22.3 percent higher ADV, up from RM37.3 billion in 2021 to RM45.6 billion in 2022. Bursa Malaysia will continue to collaborate with all brokers and market intermediaries to strengthen its value proposition and attract more participation in the Exchange. This will be achieved by facilitating innovations to revamp the investors’ trading experience, while driving market conversations with more targeted educational and marketing initiatives.
According to Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia, given the rising global competition, it is imperative that we maintain our endeavours to promote our market and its various investment options, catering to the diverse risk appetites of investors. Working closely with our broker partners is essential in producing our collective desired outcomes, and we will continue to do so to raise public awareness about investing and make our market dynamic and appealing to investors.
The complete list of winners of the Bursa Excellence Awards 2022 is as follows:
Malaysian REITs remain a safe haven amid market volatility – MIDF Research
According to MIDF Research analyst Jessica Low Jze Tieng, Malaysian real estate investment trusts (REITs) remain as safe-haven investments for investors amid market uncertainty, owing to growing contagion fears with the collapse of Silicon Valley Bank and the fallout of Credit Suisse Group AG. Local REITs could provide shelter for investors amid market volatility, as they could offer a decent average yield of 5.3% to act as an inflation hedge. The earnings outlook is positive for local REITs this year, given that earnings of REITs with exposure to the retail and hotel industry are seen improving further this year, due to recovery of consumer spending at malls and higher tourist arrivals. The performance of retail REITs is expected to remain steady, particularly for REITs with malls in good locations, such as IGB REIT, Sunway REIT, Pavilion REIT and KLCCP Stapled Group.
Retail spending is also expected to be supported by the festive season in 2Q2023, and higher tourist arrivals. Stronger tenant sales in 2Q2023, and rental reversion is expected to remain in positive territory. Also REITs with exposure to the hotel industry, namely Sunway REIT and KLCCP Stapled Group, is expected to see better earnings contributions from their hotel divisions. The hotel industry is expected to turn around this year, due to growth in domestic tourism and higher tourist arrivals. Similarly, an industrial REIT, namely Axis REIT, is expected to report stable earnings, due to solid demand for industrial space.
Despite consumers shopping at physical stores since the reopening of the economy, the online shopping trend remains, and that supports demand for warehousing space. As such, the defensiveness of industrial assets attracted interest of several REITs, such as KIP REIT and CapitaLand Malaysia Trust, to venture into the industrial space. Growing competition among REITs in the industrial space may compress acquisition yields for industrial assets going forward. Local REITs are expected to benefit with BNM anticipated to keep the OPR unchanged this year.
With MIDF economists projecting Bank Negara Malaysia (BNM) to keep its overnight policy rate (OPR) at 2.75% for the rest of 2023, it will be a positive for REITs, as it eases concern over rising borrowing costs. The central bank has paused the OPR twice in 2023, and the pause provided relief to REITs with high floating-rate borrowings, such as Al-‘Aqar Healthcare REIT with 100% Islamic financing on a floating rate, Sunway REIT with 68% debt on a floating rate, and Pavilion REIT with 65% financing on a floating rate. Hence, the risk of higher borrowing cost for REITs is seen as low in the near term, and earnings growth should remain intact. Low maintains her “positive” recommendation for the REIT sector, with her top picks being IGB REIT (“buy”; target price: RM1.86) and Sunway REIT (“buy”; RM1.73).
Eye On The Markets
This week, on Friday (24Mar), the Ringgit opened at 4.4250 against the USD from 4.4700 on Monday (20Mar). Meanwhile, the Ringgit opened at 3.3335 to the Sing Dollar on Friday (24Mar). On Monday (20Mar), the FBM KLCI opened at 1408.18. As at Friday (24Mar) 10:00am, the FBM KLCI is down 1.67 points for the week at 1406.51. Over in US, the overnight Dow Jones Industrial Average closed up 75.14 points (+0.23%) to 32,105.25 whilst the NASDAQ gained 117.44 points (+1.01%) to 11,787.40.