Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 1): The share price of Bursa Malaysia Bhd skidded on the first trading day after the tabling of the National Budget 2022, which include an increase in the stamp duty rate and a special one-off prosperity tax on companies which have annual taxable income of more than RM100 million.

Bursa plunged as much as 9.3% or 70 sen to an intraday low of RM6.81 in the morning trading session. It managed to recoup some lost ground to close at RM7.09, with 19.28 million shares traded. 

Still, it fell 5.6% or 42 sen — the biggest single-day percentage drop since mid-June last year and nearly RM340 billion market capitalisation evaporated. 

In a note on Monday, CGS-CIMB analyst Winson Ng said that the two proposals under Budget 2022 are likely to have a negative impact on Bursa’s earnings for the financial year ending Dec 31, 2022 (FY22).

“The increase in stamp duty of RM200 per contract note could reduce equities' average daily trading volume (ADTV) as trading cost for investors rises.

“The introduction of the one-off special tax under 'Cukai Makmur' in 2022, with a higher tax rate of 33% (versus 24% currently) for pre-tax profit in excess of RM100 million, could increase tax expenses for Bursa in FY22,” he said.

Ng added that CGS-CIMB had downgraded its rating of the stock to “reduce” (previously "hold"), with a lower target price (TP) of RM6.59 (previously RM7.51).

Similarly, Hong Leong Investment Bank (HLIB) analyst Jeremy Goh echoed the same viewpoint on the two proposals under Budget 2022.

“Looking ahead, we feel that the recent change in the stamp duty structure may significantly increase trading cost for institutional investors, potentially denting ADTV.

“In addition, 2022’s Cukai Makmur will directly hit Bursa via higher tax expenses and indirectly as ADTV may soften with market sentiment dampened,” he added.

Goh also said that HLIB had downgraded its rating of Bursa to “sell” (previously “buy"), with a lower TP of RM6.52 (previously RM8.93).

Meanwhile, AmInvestment Bank analyst Kelvin Ong downgraded his rating of the stock to “hold”, with a fair value of RM7.90 (previously RM9.40), citing Budget 2022’s stamp duty rate increase.

However, Ong said it was also announced in Budget 2022 that brokerage services will be exempted from the service tax next year, which will partially offset the higher stamp duty rate.

“The increase in transaction cost is anticipated to impact trading activities of retail investors. We expect retail investors that typically invest on short-term investment horizons to be sensitive to the change in transaction cost.

“Meanwhile, the above change in transaction cost is not expected to significantly impact trading activities of institutional investors who are longer-term investors with trading activities driven by the fundamentals,” he added.

Following the tabling of the government’s Budget 2022 last Friday, the stamp duty rate of contract notes is slated to be raised from 0.1% to 0.15% from Jan 1, 2022, with the cap of RM200 per contract removed.

Additionally, it was also announced that Cukai Makmur will be implemented, whereby a 24% income tax will be imposed on the first RM100 million portion of companies’ annual taxable income, while the excess will be subjected to a 33% income tax.

See more Budget 2022 highlights here.

Edited ByJoyce Goh & Kathy Fong
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