KUALA LUMPUR: Some analysts are not surprised by Malaysian stocks hitting the RM2 trillion mark in market capitalisation and in the process, pushing the key index to breach 1,600 points for the first time in two years on Tuesday, given the current momentum observed.

Those at MIDF Research pointed out that Bursa Malaysia's average daily volume (ADV) on a year-to-date basis till May 7 came in at 4.19 billion shares, an increase of 28.7 per cent year-on-year (yoy), surpassing 2022 and 2023 levels.

Bursa had previously seen its first quarter of 2024 ADV rose 36.9 per cent yoy to RM2.93 billion as all segments saw higher trading interest, especially foreign institutions. 

"ADV for domestic institutions, retail and foreign institutions grew 22.8 per cent yoy to RM1.25 billion, 7.4 per cent yoy to RM656 million and 99.0 per cent yoy to RM1.02 billion respectively," the firm said.

Rakuten Trade vice president of research Thong Pak Leng said the main FBM KLCI index breaking the 1,600 barrier on Tuesday was underpinned by continuous accumulation in the blue chips by foreign funds. 

"Though we would prefer the ascension to persist, an intermittent correction may occur allowing the market to digest recent solid performance which is deem healthy," Thong said in a note today.

MIDF Research expects good prospects for trading activities this year from a corporate earnings and valuation point of view.

"We expect robust economic growth and hence corporate earnings. We also expect that the expectations of US rate cuts will lead to positive sentiment, especially among foreign investors, and this will drive better market valuations."

The firm maintained its "Buy" call on Bursa Malaysia Bhd with an unchanged target price of RM8.20.

https://www.nst.com.my/business/corporate/2024/05/1047845/bursas-rm2tri-milestone-not-surprise-given