Bursa Malaysia looks to retail, foreign investors for further value

Greater retail participation in the FBM KLCI will add volatility to the market which in turn will fuel liquidity, says Bursa CEO


Bursa Malaysia Bhd is striving to “balance out the market” by bringing in more retail and foreign investors, while building off its encouraging fiscal performance last year.

Its CEO Datuk Seri Tajuddin Atan said greater retail participation in the local stock exchange, FTSE Bursa Malaysia (FBM) KLCI, will add volatility to the market which in turn, fuels liquidity.

“It is our endeavour to balance out the market with our strategy of attracting foreign funds and retail participants,” Tajuddin said, adding that this is a good counterbalance to institutional exposure which brings in high volume, but lesser volatility.

Macro and domestic economic factors have helped encourage funds to flow back into Malaysia’s capital markets, with the country registering its first total net foreign inflow of RM10.8 billion in 2017 in three years.

A strengthening domestic economy has also spurred more retail participation in the securities market, up to 23% in 2017 from 21% in 2016.

Tajuddin was speaking after Bursa Malaysia announced its full-year results for the financial period ended Dec 31 last year (FY17), which saw the exchange improving its revenue and net profit by 9.9% and 15.2% respectively, to RM556.83 million and RM223.04 million compared to FY16.

The net profit managed for the year was the highest the company achieved since 2007, driven by higher revenue from securities trading, listing and issuer services and depository services.

This was offset by the lower revenue generated from the derivatives market, which was negatively impacted by the revision in guarantee fees and lower number of FBM KLCI Futures (FKLI) contracts traded for the year, in spite of the increase in Crude Palm Oil Futures (FCPO) trading volume.

“We think there is some movement as the FCPO is tracking quite well,” Tajuddin said.

“In contrast, the FKLI was not tracking that well last year simply because the market index was moving marginally (without much volatility).”

He said Bursa Malaysia is planning to launch new products, bring in more market players, decouple membership and increase selling agents within the derivatives space to help boost activity levels.

Meanwhile, he said a promising initial public offering pipeline this year bodes well for the exchange in terms of boosting its market value.

Bursa Malaysia declared an 18.5 sen second interim dividend for FY17, amounting to a 93% payout of total net profit and which is payable on March 5 this year.

Inclusive of a 15 sen special dividend, the total dividend payout for the fiscal year was 53.5 sen.

Since listing back in 2005, Bursa Malaysia has maintained a dividend payment of above 90% of net profit, which sits above its 75% dividend payout policy.