Bursa earnings to rise as volume doubles

BURSA Malaysia Bhd, operator of the nation’s stock exchange, expects earnings to improve as an increase in trading volume boosts revenue, chief executive officer Datuk Yusli Mohamed Yusoff said.

“Volumes are more than double what they were in the first quarter, so that’s a good sign,” Yusli said in an interview with Bloomberg Television in Hong Kong today. “As trading activity picks up, we do expect our revenue numbers and our profit and loss numbers to improve accordingly.”

The key Kuala Lumpur Composite Index has risen 21 per cent in the past three months, reflecting gains in Asian stock markets amid optimism the global recession is easing. The measure fell 39 per cent last year, the biggest decline in more than a decade.

The daily trading volume surged fourfold to 1.7 billion shares so far in the second quarter, from 406 million shares in the first three months, data compiled by Bloomberg showed. On May 11, 3.8 billion shares changed hands, the busiest trading session since February 28, 2007.

“It’s obviously going to be very positive,” Yusli said.“The market rally has surprised everyone, nobody expected it to rebound so strongly and this has been a positive surprise for Bursa and for investors,” said Jason Chong, who helps oversee $1.6 billion of UOB-OSK Asset Management in Kuala Lumpur.

“The big question is whether the momentum is sustainable. That will very much depend on the recovery in the global economy.”Bursa’s first-quarter profit slumped 63 per cent from the same period a year earlier as the global financial crisis eroded trading volume. Shares of Bursa have gained 38 per cent this year, outpacing the stock index’s advance.

Foreign BuyersMalaysian stocks lured net foreign purchases in April for the first time in 13 months, giving the market a “big fillip,” CIMB Investment Bank Bhd said on May 28.Malaysia’s central bank has said that the domestic economy is likely to improve in the second half as the world economy stabilises and the government unveiled two stimulus plans to revive growth.

The Securities Commission said earlier this month it plans to make stock-market listings easier for some companies, including those with no earnings history, to bolster trading. Foreign companies will no longer need a minimum market capitalisation of RM1 billion (US$290 million) before their shares are allowed to trade in Malaysia.Bursa expects a China-based company to sell shares in Malaysia “fairly soon,” Yusli said. -- Bloomberg