At the World Capital Market Symposium 2018 on 6 Feb 2018, Malaysia’s Prime Minister unveiled a number of measures including the ‘Malaysia-Singapore Connect’, intraday short-selling, volumebased incentive programs, 3-year stamp duty waiver and fee waiver for new investors. In our view, the new measures will be positive for Bursa Malaysia in encouraging cross-border trades and boosting the overall average daily value. Maintain BUY and PT of RM12.00.

Bursa Malaysia Likely to Benefit From Further Liberalization Plans

Prime Minister YAB Dato’ Sri Mohd Najib announced a host of measures at the World Capital Market Symposium 2018. These included:- i) Establishment of a stock market trading link between Bursa Malaysia (BM) and Singapore Exchange (SGX), or better known as the ‘Malaysia-Singapore Connect’, by end-2018, which will allow investors to trade and settle shares in a more cost-effective manner. SGX-BM will jointly develop an operational model and regulatory framework; ii) A 3-year stamp duty waiver effective Mar2018 on share trading of mid and small-cap companies on Bursa Malaysia; iii) Intraday short-selling will be allowed for all investors and liberalization of share margin-financing rules; and iv) Fee waiver on trading and clearing fees for 6 months for all new investors.

Our View – Easier Access to a Greater Capital Market of USD1.2tr

We expect the above measures to boost the vibrancy and liquidity of Malaysia’s capital market through increased cross-border trading, and enhance the competitiveness of Bursa. We believe that as there will be increased awareness and incentives, overall investor participation will increase and potentially elevate Malaysia’s status to that of a new financial hub. The introduction of intraday short-selling activities and a volumebased incentive program are likely to boost Bursa’s current average daily value (ADV), which stood at RM3.46bn in Jan18 (vs. 2017’s RM2.53bn).

Maintain BUY. PT Unchanged at RM12.00 (based on 26x 2018E EPS)

We Reiterate Our BUY Rating on Bursa, With a 12-month Price Target of

RM12.00 based on a 26x P/E target on the 2018E EPS. Our key assumptions for the securities market ADV remain unchanged at RM2.8bn and RM2.6bn for 2018E-19E. Key risks: reversal in trading sentiment.

Source: Affin Hwang Research - 7 Feb 2018