Lower ADV expected to weigh on Bursa’s 2Q showing

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 a 2Q25 net profit of RM59mil to RM65mil, which would be 10% below 1Q25 and 23% below the same quarter a year ago, with the sequentially lower ADV dragging total revenue from securities, which makes up half of total operating revenue.

Kenanga Research 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 RM2.85bil (5% below RM3bil) in anticipation for uncertainties to persist. Following these adjustments we cut our FY25/FY26 earnings by 8% and 3%,” it added.

The research house expects trading sentiment to remain subdued in the second half of the year.

These include the upcoming US Federal Open Market Committee meetings on July 30 and Sept 17, which could influence the direction of US interest rates.

Other closely watched dates are Aug 1, the deadline for US tariff announcements and Aug 15, when Malaysia is scheduled to release its 2Q25 gross domestic product data.

Kenanga Research also flagged inflationary concerns linked to the expanded sales and service tax and uncertainty over the RON95 fuel subsidy rationalisation mechanism.