KUALA LUMPUR (Jan 31): Bursa Malaysia is expecting average daily value (ADV) of stock trading to improve slightly to between RM2.3 billion and RM2.4 billion this year, up from RM2.07 billion in 2022, supported by gradual improvements in trading activities.

Its chief executive officer Datuk Muhamad Umar Swift said that with recent improvements in the ringgit and listed companies’ valuations, the stock exchange operator is expecting more foreign and domestic investments going forward.

“If you look at the support [that] we have seen from listings this month, trading is increasing and improving, but it is a step-by-step [process],” said Umar at a media briefing on Tuesday (Jan 31).

Bursa Malaysia’s net profit contracted 36% last year to RM226.57 million from RM355.25 million in 2021, weighed down by lower securities trading revenue as ADV normalised to RM2.07 billion in 2022 from RM3.55 billion in 2021.

The company is targeting a profit before tax (PBT) of between RM295 million and RM326 million this year.

Bursa Malaysia reported a PBT of RM310 million in 2022, which is 35% lower than RM478.44 million in 2021, while revenue contracted 21% to RM603.25 million from RM767.54 million, weighed down by lower trading activities by the retail and domestic institutional investors.

Umar told reporters on Tuesday that the Bursa Malaysia will continue to expand its product offerings, particularly by bringing in more initial public offerings (IPOs).

It is aiming for 39 IPOs with a combined market capitalisation of RM10 billion this year, compared with 35 IPOs with combined market capitalisation of RM11.5 billion in 2022, said Umar.

Last year, the local bourse saw two large cap companies listed on the Main Market, namely Senheng New Retail Bhd (with a market capitalisation of close to RM1.61 billion at the time of listing) and Khazanah Nasional Bhd-backed Farm Fresh Bhd (with a value of nearly RM2.51 billion).

Bursa Malaysia chairman Tan Sri Abdul Wahid Omar said there is rising interest from small-and-medium enterprises (SMEs) seeking listing this year, and this explains the lower estimated combined market capitalisation.

“If you see the first month, in January itself, there were seven listings, six ACE and one on Main Market. Given the level of oversubscription, it has attracted a lot of interest from other SMEs, which is the target market for ACE.

“The idea is to allow these companies that are growing to come to the market and undertake primary offerings, raise some capital for them to grow. Some of them may be small at the outset, but by having access to the capital market, it will enable them to grow,” he explained.

Apart from bringing in more new listings, Bursa Malaysia will continue to enhance the public's accessibility to market information in order to sustain retail investors’ trading interest, said Umar.

“We have two initiatives, one is to bring new interesting products to market through IPOs. The other is to enhance the products that we have through PLC transformation. The other thing that you will see going forward is access to research, access to information.

“The idea is to create things to have conversation. Whether you like the company or dislike the company, we encourage you to have a conversation because when you talk about it, you create interest in it,” he said.

Umar also warned against any attempt for market manipulation activities as the exchange operator strives to build an orderly and vibrant capital market.

“We want an orderly market. Within an orderly market, we want to ensure there is healthy speculation and an informed market. Bearing in mind, every trade made on the exchange runs through an AI filter. Our team will actually look into these [filtered] trades. Believe it or not, we know who you trade with, how you trade.

“If you overstepped boundaries, there is a whole escalation process. We are trying to ensure there is, if you like, an orderly, stable market that is vibrant,” he said.

Shares of Bursa Malaysia closed seven sen or 1% lower at RM6.71 on Tuesday, giving it a market capitalisation of RM5.43 billion.

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