KUALA LUMPUR (Jan 28): Bursa Malaysia Bhd expects the average daily trading value (ADV) of securities to drop further but it will still be above the level in 2019, after the stock exchange saw a decline in 2021.

Speaking at a media briefing, Bursa Malaysia’s chief executive officer Datuk Muhammad Umar swift said the decline in ADV in 2021 was not surprising.

“Clearly, 2020 was the year of the health sector and glove stocks driven by the pandemic, which then eased off in 2021. There was a fall in ADV, which was not unexpected.

“As we move into 2022, we expect ADV to continue to normalise, but it would still be higher than what we experienced in 2019, pre-pandemic,” he said.

For the fourth quarter ended Dec 31, 2021 (4QFY21), the exchange saw its total ADV falling 46.6% to RM2.66 billion from RM4.98 billion in the previous year’s corresponding quarter.

For the full-year period (FY21), its ADV fell 15.1% to RM3.66 billion from RM4.31 billion a year earlier.

Asked if the reinstatement of the stamp duty cap for the trading of shares would hurt ADV in 2022, Muhammad Umar said there would not be much impact.

“What investors are looking for are growth and dividends. The impact of the stamp duty on ADV is somewhat muted because it is a small percentage of the cost. What is really key [for investors] is the return to profitability of public-listed companies,” he said.

He added that the reinstatement of the cap — which the Ministry of Finance is setting at RM1,000 with a rate of 0.15% — is actually welcomed by the market, as it ensures the local market remains competitive.

Bursa Malaysia posted a 38% decline in its net profit for the fourth quarter ended Dec 31, 2021 (4QFY21) to RM65 million, due to lower contribution from its securities market segment amid the decline in ADV.

Quarterly revenue fell 28% to RM165.2 million from RM230.7 million a year earlier.

For the full financial year ended Dec 31, 2021 (FY21), its net profit stood at RM355.25 million, down 6% from RM377.7 million, while annual revenue fell 4% to RM767.5 million from RM799 million.

Looking ahead, the bourse expects 37 listings in 2022, versus the 30 seen in 2021, although Muhammad Umar said that the actual number of initial public offerings (IPOs) will depend on market circumstances.

Bursa Malaysia chairman Tan Sri Abdul Wahid Omar said 2021 has been very challenging due to the ongoing pandemic, which he said is “far from over”.

“The threat of new variants will affect domestic and global economic performance, which will in turn lead to continued market volatility.

“However, we believe the 5.8% GDP growth as forecast by the World Bank and the 5.5% to 6.5% official forecast for 2022, as well as the resumption of economic activities is expected to show a positive trajectory on corporate earnings, which should help maintain investors’ interest,” he said.

The share price of Bursa Malaysia has been on the decline since August 2020, falling from the peak of RM10.60 to RM6.18 on Friday (Jan 28), giving it a market capitalisation of RM5 billion. There are five 'buy' calls on the stock, while there are nine 'hold' calls and three 'sell' recommendations, with an average target price of RM6.97.