Derivatives strength to cushion Bursa Malaysia's Q3 earnings

KUALA LUMPUR: Bursa Malaysia Bhd is expected to record largely stable earnings in the third quarter (Q3) of 2026, supported by stronger derivatives trading activity and additional trading days.

Hong Leong Investment Bank Bhd (HLIB) expects Bursa Malaysia's sequentially weaker average daily trading value (ADV) to be offset by stronger derivatives average daily contracts (ADC) in Q3 2026.

"By our estimates, Bursa could post quarterly earnings of RM70 million, bringing its nine months of 2026 (9M26) tally to RM215 million or 75 per cent/76 per cent of our/consensus full year forecast," it said in a note.

Bursa is scheduled to release its Q3 2026 results on Oct 28.

HLIB said the sequential decline in Q3 2026 ADV had already been factored into its full-year assumption of RM3.05 billion, which it believed remained attainable, given the year-to-date ADV of RM3.18 billion.

Looking ahead, the firm identified several factors that could support ADV, including the expansion of the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI), the 16th General Election (GE16) and a possible downgrade of Indonesia by MSCI.

"We retain our "Buy" rating on Bursa Malaysia, albeit with a lower target price of RM9.38.

"Despite year-to-date ADV matching the annual post-pandemic high recorded in 2024, Bursa Malaysia's market capitalisation-to-ADV ratio remained 0.3 standard deviation below the post-global financial crisis mean," it added.