Market sentiment weighs on Bursa earnings

PETALING JAYA: A lower average daily value (ADV) of trading activity is expected to weigh on stock exchange operator Bursa Malaysia Bhd’s net profit for the second quarter ended June 30, 2025 (2Q25).

Kenanga Research, which has maintained a “market perform” call on the stock with a higher target price of RM8 from RM7.80, said the ADV for 2Q25 of RM2.29bil came in below its expectations of RM3bil.

It noted that 2Q25 ADV declined 13% from 1Q25 and was a 37% decrease from the same quarter a year ago. The research house pointed to the impact on market sentiment from shifting developments on US tariffs.

“This had particularly undermined sentiment for semiconductor industries. Meanwhile, prolonged conflicts in the Middle East left mixed reactions between oil and gas counters and port operators,” it added.

It expects 2Q25 net profit of RM59mil to RM65mil, which would be 10% below 1Q25 and 23% below the same quarter a year ago on the sequentially lower ADV dragging total revenue from securities, which makes up half of total operating revenue. It has also cut forecast ADV to RM2.53bil for the financial year ending Dec 31, 2025 (FY25) from RM2.91bil previously. 

“We also trim our FY26 ADV to RM2.85b (5% below RM3bil) in anticipation for uncertainties to persist.  Following these adjustments we cut our FY25/FY26 earnings by 8%/3%,” it added. 

Kenanga Research expects trading sentiment for the second half of the year to continue seeing weakness, with market participants being watchful of certain dates such as US Federal Open Market Committee meetings, particularly on July 30 and Sept 17 that could set the tone for US Fed movements, the Aug 1 deadline for US tariffs and Aug 15 for Malaysia’s 2Q25 gross domestic product, it said, adding that other concerns were inflationary impact from the expanded sales and service tax and clarity on the RON95 subsidy rationalisation mechanics.