Published On: Wed, Apr 20th, 2011

Bursa Malaysia First Quarter Net Profit up 44% to RM40.5 Million

Increase due to stronger securities and derivatives trading performance.

Key Financial & Market Highlights
(1Q2011 against 1Q2010)

* PATAMI of RM40.5 million, up 44%
* Total operating revenue at RM107.8 million, up 33%
* Securities trading revenue at RM57.7 million, up 46%
* Derivatives trading revenue at RM13.0 million, up 53%
* Total expenses increased 19%
* Daily average trading value for securities rose to RM2.23 billion, up 46%
* Market capitalisation at end March 2011 is RM1.31 trillion
* Velocity at 42%
* Total derivatives contracts traded, up 54% to 2.17 million

Bursa Malaysia Berhad (Bursa Malaysia) announced April 19 profit after tax and minority interest (PATAMI) of RM40.5 million for the quarter ended 31 March 2011, a 44% increase of RM12.4 million compared to RM28.1 million for the corresponding quarter last year.

Bursa Malaysia’s Chief Executive Officer, Dato’ Tajuddin Atan said, “The strong performance this quarter is largely attributed to the increase in trading revenues from our two core business activities; securities and derivatives trading. We see the return of positive market sentiments and high liquidity, as well as strong expectations from the various government transformation programmes contributing to an increase in trading activities in the securities market. For derivatives, we see the increase largely due to both the cutover of derivatives trading on to the CME Globex® trading platform, as well as the increased volatility of commodity prices.”

The securities market recorded an increase of 46% in trading revenue to RM57.7 million in the first quarter compared to RM39.6 million in the corresponding quarter last year. Daily average trading value was higher at RM2.23 billion compared to RM1.53 billion in the same quarter last year. Daily average trading volume increased to 65% to 1.73 billion for the period under review, compared to 1.05 billion for the first quarter of 2010. For the quarter ended 31 March 2011, market capitalisation stood at RM1.31 trillion, which was an increase of 24% from the corresponding quarter last year. Market velocity was at a high of 42%.

“We are targeting velocity of 50% within two years, and if market conditions and sentiments remain as buoyant, I believe that we may reach this target even earlier,” said Dato’ Tajuddin.

Trading revenue for the derivatives market posted an increase of 53% to RM13.0 million in this quarter compared to RM8.5 million in the corresponding quarter in 2010. Total derivatives contracts traded were 2.17 million in the first quarter of 2011, compared to 1.41 million in the same quarter last year. The Exchange’s main derivatives product, the Crude Palm Oil Futures (FCPO) contract, recorded an increase of 62% to 1.51 million contracts traded compared to 0.93 million in the corresponding period last year. Increasing volatility in commodity prices for hedging purposes, as well as the high prices for crude palm oil contributed to the increased volumes for FCPO. The Kuala Lumpur Composite Index Futures (FKLI) contract also posted an increase of 40% to 0.61 million contracts compared to 0.43 million in the first quarter of 2010.

Total expenses increased by 19% to RM57.8 million in the first quarter of 2011 compared to the corresponding quarter last year. This was attributed to an increase in technology charges arising from the service fees charged by CME for the use of the Globex® trading platform, staff costs, market development costs as well as other operating expenses. The increase in total expenses was partially offset by lower depreciation and amortisation.

Dato’ Tajuddin said, “Given the recent calamities in Japan, Middle East and North Africa countries, investor sentiment has returned to being cautious. However, we expect that investors will take cognisance of the potential that the developments under the GTP will have on several key sectors such as construction, property, financial services, and healthcare, among others. Sustained domestic corporate earnings, prospects for mergers and acquisitions coupled by the strong fundamentals of the country are positive factors for investments going forward. The recent announcement made by the Prime Minister during Invest Malaysia 2011 on the fast track scheme for dual licensing that will allow experienced securities remisiers to trade derivatives can have a positive impact on the derivatives market for more cross selling opportunities. The increase in proprietary day traders can also lead to greater market vibrancy and liquidity.

“In June, Malaysia will be upgraded to an ‘Advanced Emerging Market’ by FTSE Global from its current ‘Secondary Emerging Market’. We hope to see a rerating of portfolio by investors arising from this upgrade,” he said.

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