Published February 5, 2009

Bursa Q4 profit plunges to RM13.5m

It was affected by global downturn, political uncertainty

By PAULINE NG
IN KUALA LUMPUR

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THE global downturn and domestic volatility took a toll on Bursa Malaysia in its fourth quarter to end-December, with profit plunging almost three-quarters to RM13.5 million (S$5.6 million), from RM49.5 million a year earlier.

Trading revenue was 55 per cent down from Q4 2007. And daily average trading value was RM0.91 billion, versus RM1.89 billion previously.

Announcing its results yesterday, the company said that 'downward pressure' is expected to continue this year. It also conceded that its optimism at the start of 2008 was off-target. Back then, it aimed for 56 per cent trading velocity during the year. In fact, it achieved only 34 per cent. And far from meeting its target of 50 per cent growth in derivatives contracts, these declined one per cent.

On an annual basis, it made a profit of RM104.4 million - 57 per cent lower in 2007 - on revenue of RM331.7 million.

Despite continuing economic uncertainty, the stock exchange operator said that it will continue to focus on growing the Islamic capital market and developing a commodities niche in the region - two areas in which it believes that it has a head start and competitive advantage over its peers.

Lack of interest in stock markets worldwide as a result of the global recession has been compounded in Bursa's case by the constant politicking in Malaysia. Already bearish on Malaysian equities this year, fund managers cite the non-stop political squabbling and uncertainty that re-ignited more than a year ago as major reasons why foreign and local clients will continue to steer clear of the market.

The lack of activity has already prompted industry players to seek shorter trading hours.

Hwang-DBSVickers said that in Q4 2008, average daily volume was 561 million shares amounting to RM854 million. December was the weakest month, with only 342 million shares traded.

Bursa's performance in the quarter was weaker than the broker's projection of a profit of RM16 million on turnover of RM120 million. It considers the stock relatively expensive compared with those of exchanges in Singapore and Hong Kong, which it says offer better returns on equity and dividend yields.

Bursa has proposed a dividend per share of 7.8 sen, taking its full-year 2008 payout to 24.30 sen.