Bursa on course to beat FY19 financial performance

by RAHIMI YUNUS / pic by BLOOMBERG

BURSA Malaysia Bhd noted record trading volumes on its securities and derivatives markets driven by liquidity and local and external factors, allowing it to post a record financial quarter year-to-date.

The exchange holding company’s net profit surged 158.9% year-on-year (YoY) to RM121.9 million in the third quarter ended Sept 30, 2020 (3Q20), as a result of higher trading revenue from its securities and derivatives markets.

Revenue jumped 93.8% YoY to RM237.7 million in 3Q20 as its securities market business’ trading revenue increased by 188.4% to RM161 million in the period due to higher average daily trading value for on-market trades and direct business trades.

Trading revenue from its derivatives market increased by 15% YoY to RM21.2 million in 3Q20, mainly due to higher volume of crude palm oil futures and FTSE Bursa Malaysia KLCI futures contracts traded in the period.

Daily average derivatives contract volume rose 41% to 74,408 contracts over the period, the exchange noted in a release yesterday.

The exchange operator expects fundamental factors like the development of the Covid-19 vaccine, the third wave of Covid-19 infections in Malaysia, the upcoming Budget 2021 in November, foreign markets, corporate earnings performances, and global and local economic performances to influence the volatility and performance of the local equity and derivative exchanges.

The exchange also expects to sustain Bursa Suq Al-Sila’ trading activities in the 4Q20 from increased contributions from foreign participants.

“Notwithstanding the continued uncertainties in the global and domestic markets and their impact on the volatility in both the securities and derivatives markets for the remaining period of the financial year, the exchange expects to outperform the financial performance of the financial year 2019 (FY19),” the company said in a bourse filing yesterday.

Bursa Malaysia recorded a net profit of RM272.9 million for the nine-month financial period ended Sept 30, 2020 (9M20), a 94.5% increase from RM140.3 million reported last year.

The jump in earnings was due to higher operating revenue, which increased by 55% to RM554 million from the previous corresponding period.

“The exceptional 9M20 financial performance was the highest since listing in 2005,” CEO Datuk Muhamad Umar Swift said in a statement yesterday.

He said the ongoing Covid-19 pandemic, low interest-rate environment and government’s stimulus packages have sustained investor participation across segments led by domestic institutions and retailers.

“The continuous operations of our markets have been critical in making available the necessary liquidity and risk management tools for investors to respond in a higher volatility environment and invest in new opportunities,” Muhamad Umar added.

Total revenue for 9M20 climbed 52.3% to RM568.3 million compared to RM373.2 million registered in 9M19. Earnings per share for the nine months rose to 33.8 sen from 17.3 sen in 9M19.

Muhamad Umar said Bursa Malaysia will continue to develop the marketplace and make further progress on its strategic plans despite the various challenges.

Bursa Malaysia’s share price rose four sen to RM8.52 at close yesterday, valuing the company at RM6.89 billion.