Despite having moved into the RMCO stage, retail participation on Bursa continued to chalk new highs; their average participation as of mid-July stood at 48.3 per cent. — Bernama photo
KUCHING: Bursa Malaysia Bhd (Bursa Malaysia) is expected to record a strong second quarter of 2020 (2Q20) results, driven by robust average daily volume (ADV) in 2Q.
In a report, the research team at Hong Leong Investment Bank Bhd (HLIB Research) said it expected strong earnings delivery for Bursa Malaysia with 2Q20 core profit after tax, and minority interest (PATMI) estimated at circa RM80 million compared with RM64.7 million in the 1Q20 and RM46.3 million in 2Q19.
This should bring Bursa Malaysia’s 1H20 sum to RM144.7 million, an increase of 55 per cent year-on-year (y-o-y) compared with RM93.2 million in 1H19.
The research team noted that if its estimates are right, 2Q20 core PATMI would be a quarterly record high.
“Our expectation for a strong 2Q showing is premised on robust ADV of RM3.76 billion during the quarter (up 48.5 per cent quarter-on-quarter, up 85.9 per cent y-o-y).
“For the 1H20 period, ADV amounted to RM3.12 billion (up 52.8 per cent y-o-y; 1H19: RM2.04 billion). The strong Securities segment should however see a partial offset in 2Q from weaker Derivatives as ADC fell 20.8 per cent q-o-q (1H20 ADC is still up 54.9 per cent y-o-y),” it said. It noted that Securities contributes circa 50 per cent to revenue while Derivatives makes up circa 15 per cent (using FY17 to FY19 figures).
“While we are mindful that liquidity can evaporate as fast as the flush came in, there are encouraging signs this may be sustained, at least for the remainder of 2020.
“Despite having moved into the RMCO stage, retail participation continued to chalk new highs; their average participation as of mid-July stood at 48.3 per cent, even higher than during the full MCO stage (March to April) of 26 to 35 per cent.
“This brings year to date (YTD) average retail participation to 34.1 per cent compared with 2019’s 25 per cent.
“Also, retail net buys of RM1.25 billion in June mirrored the level seen in April (heavy retail buying from an entire month of being locked down at home; RM1.27 billion). YTD ADV (as of July 15) stands at RM3.28 billion and if sustained, would very well trump the highs of 2017 (RM2.31 billion) and 2018 (RM2.39 billion),” it added.
All in, HLIB Research retained its ‘buy’ recommendation. It also revised its FY20 and FY21 ADV forecast upwards from RM2.41 billion to RM2.47 billion to RM2.88 billion to RM2.56 billion.