By MARK RAO / Pic By ISMAIL CHE RUS

Bursa Malaysia Bhd said improved securities trading helped offset weaker earnings from its derivatives trading business as the exchange operator posted a stronger third quarter (3Q) and year-to-date (YTD) showings for the period ended Sept 30.

The company anticipates geopolitical developments, coupled with tightening monetary policies in major economies, to cause volatility in the securities market in the near term.

The tapering of monetary easing policies in these economies and stabilising commodity prices are expected to dampen trading of contracts in the derivatives space, the company noted in a release yesterday.

Bursa Malaysia’s 3Q net profit increased 17.2% year-on-year (YoY) to RM51.6 million as revenue improved 9.1% YoY to RM130.27 million.

For the first nine months, earnings were up 16.9% YoY to RM167.77 million as turnover rose 8.3% YoY to RM415.63 million.

The improved YTD earnings were underpinned by the securities market, which brought in RM245.6 million and RM301.4 million in profit and revenue respectively, representing an increase of 20.1% YoY and 14.8% YoY respectively.

Bursa Malaysia CEO Datuk Seri Tajuddin Atan (picture) said the exchange’s fiscal performance was supported by the increases in trading and non-trading revenues, coupled with the vibrant equity market.

“The equity market remained buoyant up to end of 3Q. The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) registered a 6.2% gain in the first nine months on the back of overall positive market
sentiment and net inflows from foreign investors,” he noted.

Non-trading revenue was higher due to the increase in listing fee collections from initial public offerings (IPOs), new structured warrants listings and processing fees earned from corporate exercises.

Market capitalisation hit RM1.84 trillion for the period as average daily trading value for on-market trades and direct business trades improved 26.3% to RM2.63 billion.

Ten IPOs were launched on the exchange this year so far, raising a total of RM7.4 billion in proceeds which is substantially higher than the RM500 million garnered in the corresponding period last year.

Bursa Malaysia’s derivatives market noted a 17.1% YoY decrease to RM36.6 million in YTD earnings, resulting from   lower trading revenue of RM60.5 million despite seeing a marginal increase in daily contract volumes traded for the period to 58,817 contracts.

Seasonality factors affecting crude palm oil (CPO) supply contributed to increased hedging and trading of the CPO futures contract, which improved by 4.4% to nine million contracts for the nine-months.

Volumes of FBM KLCI futures contract traded declined 25.7% to 1.56 million contracts due to historically low volatility on both local and global equity markets.

Going forward, Bursa Malaysia will continue to promote Shariah investments through its Bursa Malaysia-i trading platform, with the exchange’s Shariah-compliant commodity trading platform Bursa Suq Al-Sila (BSAS) already recording a 15.2% YTD growth in average daily trading value to RM18.9 billion in the 3Q.

The local bourse is currently undertaking efforts to expand BSAS’ reach in new markets in North Africa and central Asia.

“Bursa Malaysia will continue to create a vibrant and sustainable capital market ecosystem to provide more opportunities for fundraising and trading activities for all our stakeholders,” Tajuddin concluded.