This article first appeared in The Edge Financial Daily on January 31, 2019
KUALA LUMPUR: Ahead of leaving the bourse next month, Bursa Malaysia Bhd chief executive officer (CEO) Datuk Seri Tajuddin Atan (pic) is projecting that 2019 will be a better year as deferred listings from last year will likely proceed, while existing initiatives are expected to boost market participation further.
Tajuddin, whose term ends next month, maintains that the stock market and domestic economy remain fundamentally strong, and that several pockets of optimism are already evident, although investors would like greater policy clarity from the Pakatan Harapan-led government.
Reasons to be optimistic include a stronger initial public offering (IPO) pipeline — both in terms of number and size — following the deferral of listings last year because of weak investor sentiment.
Moreover, the past two weeks have seen foreign fund inflows, which suggest a “reversal or neutralisation” of the net foreign fund outflow of 2018 amounting to US$2.9 billion (RM11.92 billion), or 0.7% of total market capitalisation.
“I strongly believe that there is no crack in the economy. We know for a fact that the new government has stepped in to adjust the financials, and I think that is respectable… [but] everybody is trying to see if this government will provide some of the policies or directions,” he said at a press briefing yesterday.
Since the change in government, Putrajaya has made leadership changes to government linked companies and yesterday the bourse operator announced Datuk Shireen Ann Zaharah Muhiudeen, 55, had been appointed its new chairman effective March 1, replacing Tan Sri Amirsham Abdul Aziz, 68, who will be retiring after four years.
Tajuddin’s early retirement was announced in December, and the 59-year old will be succeeded by Datuk Muhamad Umar Swift, currently MAA Group Bhd CEO, on Feb 11.
On the proposed trading link between Bursa Malaysia and the Singapore Exchange (SGX), he said there have not been further developments after Pakatan Harapan won the 14th general elections in May last year.
But the finality of whether that (proposed initiative) continues remains with my regulator, that is the Securities Commission Malaysia (SC). From my perspective, I have stopped that... You have to ask SC.”
Releasing its fourth quarter ended December results yesterday, Bursa Malaysia announced a 6.2% drop in net profit to RM51.86 million against RM55.27 million in the corresponding quarter last year. Revenue contracted 8.7% on year to RM128.92 million, from RM141.20 million before.
The board has approved a second interim dividend of 11.6 sen per share, payable on Feb 28.
Weaker earnings were mainly on the back of a 10% decline in trading revenue as well as lower listing and issuer services revenue. Securities market velocity dipped to 28%, compared with 31% in fourth quarter of financial year 2017 (4QFY17).
Tajuddin observed intraday short selling (IDSS) - introduced last April — helped boost trading liquidity, contributing some 1.5% to 2% of total liquidity on the local stock exchange just last year alone. “The Malaysian market is generally a ‘buy’ market and IDSS provides an opportunity to sell.”
The derivatives market recorded a 4.7% decrease in trading revenue, mainly due to the lower number of contracts traded for crude palm oil.
For the full year, group net profit was little changed at RM224.04 million, compared with RM223.04 million before; revenue dipped to RM550 million, from RM556.83 million in FY17. Bursa Malaysia yesterday closed six sen or 0.81% lower to RM7.33, valuing the company at RM5.92 billion.