KUALA LUMPUR (July 29): Bursa Malaysia Bhd’s share price dropped as much as 4.78% or 48 sen to RM9.56 before the midday break today as it tracked broader market losses and as analysts expect daily average trading value (DATV) to taper off from the fourth quarter of 2020 (4Q20).
To recap, Bursa reported strong earnings of RM86 million (up 33.2% quarter-on-quarter) for the quarter ended June 30, 2020 (2QFY20) on the back of higher securities trading revenue with a strong DATV of RM3.8 billion versus RM2.5 billion in the preceding quarter.
Analysts expect Bursa’s DATV to taper off from 4Q with the loan moratorium likely to end on Sept 30.
AmInvestment Bank Bhd analyst Kelvin Ong said borrowers will then be required to start servicing their loan repayments from Oct 1, 2020, and this is expected to reduce the level of cash to be diversified into stocks in search for higher yields as seen recently.
“Also, the suspension of short selling and flexibility of share margin accounts are seen only as temporary measures to encourage retail participation in the securities market. Our valuation is already based on FY21F earnings, and we do not expect these measures to continue moving into 2021,” he said in a note today.
Meanwhile, Kenanga Research analyst Ahmad Ramzani Ramli said in a note that he anticipates high levels of volatility to persist as investors seek comfort in counters which are the least scathed by the Covid-19 pandemic and falling commodity prices.
“We expect retailers to take on bets on the heightened activity, with rebounds from low bases appearing to be a favourite theme but we do not bet on the heightened participation (at 33%, its best performance in 10 years), which we believe alluded to retailers looking for better returns given the slew of OPR (overnight policy rate) cuts recently and that it was possibly funded by additional cash available as a result of the loan moratorium.
“While we expect volatility to continue to persist, we expect it to taper off in 4Q given soft economic data,” said Ahmad Ramzani.