US-China trade war impact remains to be seen, says Tajuddin

We believe the stock market will perform relatively well in 2018 on the back of positive projection growth, says CEO


The US and China trade war impact on Malaysia’s initial public offering (IPO) activities is yet to be seen as it is still at an early stage, said Bursa Malaysia Bhd CEO Datuk Seri Tajuddin Atan.

As such, he said the local stock market is expected to perform excellently this year.

“We are concerned about how the companies especially those who have trading relationships with the US and China will be affected. However, at this point of time, I think it’s too early to see how the full impact will be.

“January was an interesting month for the stock market, we see share prices going up globally.

Then, in February there was a little drop. We believe the stock market will perform relatively well in 2018 on the back of positive projection growth for the gross domestic product,” Tajuddin told reporters after Bursa Malaysia’s AGM and EGM in Kuala Lumpur yesterday.

Last week, US President Donald Trump announced plans to impose a 25% tariff on US$50 billion (RM193 billion) worth of Chinese exports, which include communication technology, aerospace, information and also machinery products.

Last Friday, the Trump-led administration implemented a 25% tariff on steel imported from China and a 10% tariff on its aluminium-based products.

China responded by stating its intention to impose tariffs on US$3 billion worth of US exports into the country.

The Malaysian Reserve previously reported that Bursa Malaysia’s revenue and net profit for the financial period ended Dec 31 last year (FY17) increased by 9.9% and 15.2% respectively, to RM556.83 million and RM223.04 million compared to FY16.

The company’s net profit managed for the year was the highest achieved since 2007, driven by higher revenue from securities trading, listing and issuer services, as well as 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 a lower number of FTSE Bursa Malaysia KLCI Futures (FKLI) contracts traded for the year, in spite of the increase in Crude Palm Oil Futures (FCPO) trading volume.

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

“The FKLI, however, 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, bringing in more market players, decoupling membership and also increasing selling agents within the derivatives space to help boost activity levels.

According to Tajuddin, in terms of boosting its market value, a promising IPO in the pipeline this year bodes well for the exchange.