Markets

Despite slower trading and lingering caution, Bursa remains confident in meeting full-year targets, expecting better days ahead

by RUPINDER SINGH

AS BURSA Malaysia Bhd trudges through a difficult 2025, hopes for a recovery in the second half of the year hinge on a combination of macro clarity, improving sentiment and renewed foreign participation.

Even as trading activity moderates and investor caution lingers, the bourse operator is standing firm on its full-year operational and financial targets, confident that better days lie ahead.

Following a weak first half marked by falling average daily trading value (ADV), higher operating costs and a lack of market conviction expectations for a significant earnings rebound in the near term remain tempered.

But Bursa’s management remains committed to its financial year 2025 (FY25) profit before tax (PBT) target of RM369 million to RM408 million, and a total of 60 IPOs with a combined market capitalisation of RM40.2 billion.

Bursa views the second half of 2025 (2H25) as a potential turning point for Malaysia, premised on the anticipated resolution of tariff-related uncertainties, which could help restore investor confidence and bring additional liquidity into the market.

Weak 2Q25 Results

In the second quarter ended June 30, 2025 (2Q25), Bursa reported a net profit of RM57.1 million, representing a 16.6% decline quarter-on-quarter (QoQ) and a 29.1% drop year-on-year (YoY).

This brought 1H25 cumulative earnings to RM125.5 million, marking a 19.3% YoY contraction.

The slump was attributed to broad-based revenue weakness and rising costs, as investors remained sidelined amid geopolitical and macroeconomic headwinds.

According to Hong Leong Investment Bank Bhd (HLIB Research): “Bursa inked 2Q25 profit of RM57.1 million (-17% QoQ, -29% YoY), bringing 1H25 sum to RM125.5 million (-19% YoY). This met expectations, forming 48% of our full-year forecasts but missed consensus (at 46%).”

Similarly, CIMB Securities Sdn Bhd noted that the results were “broadly in line with expectations, meeting 47.3% of our full-year FY25F forecast and 45.5% of consensus”.

From a revenue perspective, the decline was broad and significant.

HLIB Research reported that top-line contracted 6% QoQ due to weakness in all key segments: Securities (-9%), derivatives (-6%) and others (-3%).

This was mainly driven by a 13% drop in ADV and a 10% contraction in ADC.

BIMB Securities Sdn Bhd concurred, stating: “ADV continues to weaken at RM2,380 million (-39% YoY, -15% QoQ), combined with higher staff and IT-related costs.”

Adding to the pressure, operating expenses rose across the board.

HLIB Research pointed out that “the 8% jump in staff cost did not help”, while CIMB Securities reported a 7.5% QoQ (+1.6% YoY) increase in staffing expenditure.

“This was attributed to a higher headcount to support product and service expansion, as well as the hiring of contract staff for project-based initiatives,” it said.

Consequently, Bursa’s cost-to-income (CTI) ratio surged to 55.9% in 2Q25, up from 50.4% in 1Q25 and well above its original target of 50%.

For 1H25, the CTI ratio averaged 53%.

In light of these developments, Bursa revised its full-year CTI guidance to around 53%, citing sustained pressure from higher IT and administrative spending.

CIMB Securities also flagged that operating expenditure (opex) is likely to trend higher from FY26F onwards, driven by planned replacement of its core cost system.

Dividend Trim

The earnings slump was also reflected in its dividend payout.

Bursa declared a first interim dividend of 14 sen per share for the quarter down from 18 sen in the same period last year.

“Dividend per share (DPS) of 14 sen (-13.3% YoY) was announced, representing 90% payout (constant YoY), in line with the full-year DPS forecast of 31.1 sen of one of the houses,” BIMB Securities noted.

Despite the lower quantum, Bursa remains committed to high dividend payouts.

CIMB Securities expects a higher payout in 2H25F, consistent with its projection of improved earnings in the latter part of the year.

The stock currently offers a dividend yield of approximately 4%-5% depending on the forecast, which analysts believe provides some defensive appeal in an otherwise volatile equity landscape.

Sentiment Remains Subdued

The recurring theme across all research houses is the fragile state of investor sentiment.

HLIB Research observed that “local investors are still largely cautious, which explains the range bound FTSE Bursa Malaysia KLCI (FBM KLCI) performance”.

Even the latest trading data offers little reprieve.

“July 2025’s ADV of RM2.34 billion remains below 1H25 ADV of RM2.46 billion. So far, these are broadly in-line with our FY25 target of RM2.36 billion,” it said.

BIMB Securities was more direct: “Market volatility elevated on US President Donald Trump tariffs, retail and foreign investors sentiment is weak and not contributing positively.”

“Trading was skewed toward selling, with little conviction to accumulate — an unfavourable setup for Bursa, where short-selling remains structurally limited,” it added.

While HLIB Research expects the third quarter to remain tepid due to weak conviction, it sees some hope in the final stretch of the year. “With more macro clarity anticipated from 4Q25 onwards, we expect a return of risk-on sentiment and renewed foreign interest in Malaysian equities, which should help to lift ADV,” it said.

Valuation Still Offers Defensive Appeal

Despite the operational setbacks, Bursa’s valuation remains relatively undemanding.

BIMB Securities has lowered its target price (TP) to RM8.71 from RM9.33, based on 21.5 times FY25 price-to-free cashflow (P/FCF), still in line with its long-term average.

“Valuation remains undemanding — both relative to its own history and to global peers,” it said, adding, “at current levels, the stock offers a respectable 14% upside to our TP, plus a ~5% dividend yield.”

HLIB Research maintained its ‘Hold’ call with a TP of RM7.70, based on 24 times FY25 price-to-earnings ratio (P/E), in line with its 10-year average.

“Even though share price has fallen 14% year-to-date (YTD), we still find Bursa’s risk-reward profile to be balanced,” it said.

“In our view, there are no strong near-term positive catalysts, despite us looking at a higher ADV of RM2.5 billion (+6% YoY) for FY26.”

CIMB Securities similarly kept its ‘Hold’ rating and TP of RM7.40, based on a 22.6 times FY25F P/E.

“We maintain our earnings forecasts for FY25F, FY26F and FY27F with ADV targets of RM2.7 billion, RM2.8 billion and RM2.9 billion, respectively,” it wrote.

Foreign Fund Flow Divergence Poses Challenge

One striking observation across the coverage is the continued divergence in foreign fund behaviour between Malaysian debt and equity markets.

HLIB Research noted: “There is a divergence in foreign investors’ behaviour, where fund flows into Malaysian Government Securities (MGS) have been robust but this has yet to translate into meaningful allocations to local equities.”

This dichotomy presents a structural challenge for Bursa, which remains reliant on robust trading volumes to generate topline growth.

Waiting for the Turn

Although the external environment remains clouded, particularly by Trump’s tariff uncertainties and Malaysia’s own lack of domestic catalysts, Bursa is banking on a more favourable backdrop in 2H25.

CIMB Securities expects the resolution of the tariff issue to help “restore investor confidence and bring additional liquidity into the market”.

BIMB Securities, while maintaining a ‘Buy’ call, was cautious on the near-term setup.

“A sharp rebound in 2H25 appears unlikely,” it said, noting that even with global uncertainties, “US markets are hitting fresh highs while Malaysia struggles with capital outflows and weak sentiment”.

That said, Bursa’s earnings yield spread over 10-year MGS remains compelling.

HLIB Research pointed out that “the FBM KLCI’s earnings yield spread over 10-year MGS stands at a broad 4% (versus five-year mean of 2.8%), which underscores compelling relative value”.

Hope, But No Fireworks Yet

With no strong catalysts in the near term and investor sentiment still cautious, Bursa’s 2H25 outlook hinges heavily on macro factors beyond its control: Policy direction, geopolitical clarity and the return of risk appetite.

The group’s fundamentals, healthy cashflow, high dividend payout and dominant market position, offer downside protection, but a true re-rating will depend on one critical piece, namely sustained trading activity.

As HLIB Research succinctly put it: “We reckon the market will only be bullish and excited if ADV has the potential to accelerate >RM3 billion, like back in FY24.”

Until then, the local exchange may continue to coast along — waiting for conviction to return.

The post Bursa’s momentum lags as trading rebounds lose steam appeared first on The Malaysian Reserve.

KUALA LUMPUR — Bargain hunting pushed Bursa Malaysia to end the week higher as investors cheered the United States (US) tariff reduction on all Malaysian products entering the country, coupled with positive market sentiment following the announcement of the 13th Malaysia Plan (13MP).

Earlier today, the White House announced a 19 per cent tariff imposed on Malaysia, lower than the 25 per cent announced on July 7.

At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) surged 20.10 points or 1.33 per cent to close at 1,533.35 from Thursday’s close of 1,513.25.

The benchmark index, which opened 6.62 points higher at 1,519.87, hit a low of 1,519.17 in early trade and reached a high of 1,534.48 in the afternoon session.

The broader market was positive, with gainers outpacing losers 570 to 452, while 521 counters were unchanged, 947 untraded and 11 suspended.

Turnover eased to 3.16 billion units worth RM2.23 billion from 3.77 billion units worth RM3.10 billion yesterday. 

UOB Kay Hian Wealth Advisors Sdn Bhd’s head of investment research Mohd Sedek Jantan said the FBM KLCI closed higher today, buoyed by renewed investor confidence following the White House’s announcement of a 19 per cent tariff on Malaysian exports.

He said the decision places Malaysia on par with regional peers such as Indonesia, Thailand, Cambodia, and the Philippines, lower than Vietnam, Taiwan, and India, but higher than Japan.

“The announcement, released earlier today, brings an end to four months of speculation and uncertainty, giving both businesses and policymakers a clearer path forward for strategy execution,” he told Bernama.

Meanwhile, Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said investors are cautiously awaiting US jobs data that could make or break the case for a US Federal Reserve interest rate cut next month.

“On the other hand, lower-than-expected economic data from China also weighed on sentiment after factory activity on the mainland unexpectedly contracted in July. As such, the local benchmark index is seen remaining in consolidation mode, hovering around the 1,530 level,” he said.

Among the heavyweights, Maybank rose 21 sen to RM9.60, Public Bank gained eight sen to RM4.29, Tenaga Nasional soared 28 sen to RM13.30, CIMB was 24 sen higher at RM6.79, while IHH Healthcare went up three sen to RM6.68.

Of the most active counters, Pegasus Heights and TWL were flat at half-a-sen and 2.5 sen, respectively, Pharmaniaga eased half-a-sen to 17 sen, while Tanco inched up half-a-sen to 84 sen, and Ekovest added two sen to 43.5 sen.

Besides Tenaga and CIMB, the other top gainers are Main Market debutant UMS Integration which advanced 50 sen to RM5.50, Ajinomoto and Gamuda bagged 22 sen each to RM13.08 and RM5.40, respectively, and Allianz Malaysia rose18 sen to RM17.60. 

As for the top losers, Nestle dipped 34 sen to RM87.80 and both Kuala Lumpur Kepong and Mesiniaga erased 16 sen to RM19.42 and RM1.30, respectively.

Across the broader market, the FBM Emas Index soared 124.86 points to 11,525.33, the FBMT 100 Index increased 129.12 points to 11,285.63, and the FBM Emas Shariah Index gained 79.09 points to 11,540.76.

The FBM 70 Index jumped 109.26 points to 16,713.87 and the FBM ACE Index climbed 6.16 points to 4,624.37.

By sector, the Financial Services Index surged 327.50 points to 17,480.20, the Energy Index perked up 1.26 points to 749.60, the Industrial Products and Services Index was unchanged at 159.14, while the Plantation Index shed 24.07 points to 7,370.97.

The Main Market volume improved to 1.97 billion units valued at RM1.98 billion from 1.94 billion units valued at RM2.77 billion on Thursday.

Warrants turnover fell to 895.32 billion units worth RM143.46  million from 1.43 billion units worth RM210.54 million previously.

The ACE Market volume tumbled to 289.60 million units worth RM108.93 million from 404.93 million units worth RM124.64 million yesterday.

Consumer products and services counters accounted for 199.04 million shares traded on the Main Market; industrial products and services (287.73 million), construction (267.22 million), technology (251.30 million), SPAC (nil), financial services (62.51 million), property (491.17 million), plantation (25.68 million), REITs (14.50 million), closed-end fund (21,600), energy (125.07 million), healthcare (164.44 million), telecommunications and media (23.25 million), transportation and logistics (22.84 million), utilities (39.32 million), and business trusts (14,700). — BERNAMA

The post Bursa Malaysia ends sharply higher as 13MP, US tariff cut woo bargain hunting appeared first on The Malaysian Reserve.

KUALA LUMPUR — Bursa Malaysia rebounded from two days of losses to open higher on Friday, supported by improved sentiment following the United States’ (US) move to reduce tariffs on Malaysian imports.

Washington earlier announced a 19 per cent tariff on Malaysian goods, effective Aug 1, 2025.

At 9.10 am, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 8.83 points, or 0.58 per cent, to 1,522.08 from Thursday’s close of 1,513.25.

The benchmark index had opened 6.62 points higher at 1,519.87.

Market breadth was positive, with 200 gainers outpacing 138 decliners. A total of 292 counters were unchanged, 1,860 untraded, and 11 suspended.

Turnover stood at 244.74 million shares worth RM111.66 million. — BERNAMA

The post Bursa Malaysia opens higher on US tariff cut boost appeared first on The Malaysian Reserve.