Turnover was flat in 2Q. Q-o-q, average daily trading value (ADT) was roughly 15% lower than 1Q's RM1.53 billion, impacted by external economic uncertainties.

Volume pressure is expected to continue near-term due to the noise level on the external front. There could be downward pressure on ADT assumptions for FY2010/11 and the negative impact on earnings would likely be severe to Bursa's bottom line.

Consensus estimates are too bullish. The possibility of sudden market correction has not been fully factored into current consensus earnings estimates. Many analysts still argue strong volume performance is sustainable despite Europe's sovereign debt chaos and China's soft landing. Consensus net profit forecast for Bursa is RM140 million in FY2010, assuming an ADT of RM1.6 billion. We believe these estimates are too aggressive.

We maintain our sell rating and price target of RM6.90. We value the exchange based on 30 times FY2010 EPS of 23 sen per share. We are comfortable with a target PER of 30 times against Bursa's historical average PER of 34 times. ? Kenanga Investment Bank Bhd Research, July 19

This article appeared in The Edge Financial Daily, July 20, 2010.