KUALA LUMPUR: Bursa Malaysia Bhd’s net profit fell 26.5% to RM46.85mil in the first quarter ended March 31, from RM63.78mil in the same period a year ago, mainly due to lower operating revenue. 

The stock exchange operator said the decrease was primarily due to lower operating revenue by 16.2% to RM121.4mil from 1Q2018.

Revenue in the first quarter stood at RM126.52mil, down 16% from RM150.71mil from a year ago. Its earnings per share for the quarter stood at 5.80 sen against 7.90 sen previously.

In a statement, Bursa Malaysia said total operating expenses in 1Q’19 which saw a marginal decrease by 1.4% to RM62mil from RM62.9mil a year ago continue to be well managed despite an increase in developmental expense. The marketing and development expenses increased mainly due to the higher activities carried out by the Securities and Derivatives Markets. 

While 1Q’19 was a weak quarter for the exchange, this was consistent with the prevailing domestic and global developments, which include concerns of slower economic growth, weaker corporate earnings and palm oil prices. 

However, market sentiment is seen to be improving reflected by the positive momentum in monthly average daily trading value (ADV) and monthly average daily contracts (ADC) that have been trending upwards through the quarter under review.

“A bourse is a reflection of wider conditions. The first quarter of the year remained challenging on the back of weaker sentiment largely influenced by external concerns. These concerns are wide ranging, and are driving uncertainty in the global economy. The spill over of this impact is also affecting businesses of all sizes in our local economy,” CEO Datuk Muhamad Umar Swift said.

“While the FTSE Bursa Malaysia KLCI Index weakened in the first quarter, it is important to note that the small and mid-cap indices continue to show a positive trend, with the FTSE Bursa Malaysia Small Cap Index and FTSE Bursa Malaysia Mid-70 Index recording a year-to-date (YTD) growth of 13% and 9% as at end-March,” he said.

In the first quarter, securities market registered trading revenue of RM59mil compared to RM76.3mil in the previous corresponding quarter, down by 22.6% as a result of lower ADV for securities market’s on-market trades in 1Q’19. 

The total non-trading revenue decreased by 7.6% to RM42.1mil in 1Q’19 from RM45.6mil in 1Q’18 mainly due to the decline in listing and issuer services revenue. However, this was partly offset by higher market data revenue mainly due to higher number of subscribers.

Derivatives market trading revenue decreased by 13.8% to RM16.4mil in 1Q’19 from RM19mil in 1Q’18, mainly due to lower number of contracts traded for crude palm oil futures and FTSE Bursa Malaysia KLCI Futures, as well as higher market incentives incurred in 1Q’19.

Bursa Suq Al-Sila’ registered a trading revenue of RM3.9mil despite the growth in ADV by 39.6% to RM31.6bil in 1Q’19.

“Looking beyond general analysis, we believe that these temporary challenges are the impetus that can drive positive transformation amongst more agile participants across the broad economy. The fundamentals of the Malaysian economy are strong and robust, and we remain confident of the country’s resilient growth trajectory.
 
“The recent positive announcements such as the revival of the East Coast Rail Link and Bandar Malaysia projects will have a positive impact and act as a catalyst that will stimulate the broader market,” Umar said. 

He added that Bursa Malaysia would continue position the exchange for long-term growth by improving operational efficiency, digitalising its services to provide better customer experience such as its upcoming CDS e-services and enhancing the breadth and depth of the capital market with the introduction of new products.