Is the bull market ending, trading weakening, and the Malaysian Exchange not good?

(Kuala Lumpur, 1st) The Malaysian stock market at the beginning of this year seems to have come to an end, and the popularity of national stock trading is gone. Currently, trading volume is sluggish. Many brokerage firms believe that the performance of the Malaysian Stock Exchange will decline, and they have lowered their ratings one after another.

Among them, the average daily transaction value (ADV) of the Malaysian Stock Exchange increased by 69.6% year on year, and the trading value in August increased 6% month-on-month, showing strong performance.

However, with market concerns about the US election results and the escalation of geopolitical tension in the Middle East, the average daily trading value is expected to decline in the final quarter.

CIMC Securities analysts pointed out that after deducting the direct trading business, the average daily turnover was only RM2.4 billion, a decrease of 31.4% compared to RM3.5 billion in the third quarter.

Societe Generale Investment Bank analysts also pointed out that the average daily turnover of RM2.7 billion in October was the lowest for the whole year, which is still a long way from the average daily turnover of RM3.6 billion in the first nine months.

“Looking ahead, some headwind factors will continue and investor sentiment will continue to be sluggish, so we will reduce our average daily turnover value by 7-8%.”

Analysts believe that the imposition of a 2% dividend tax in the 2025 budget will not have a significant impact on retail investors, but they also point out that if listed companies with sufficient cash announce special dividends before the tax policy is implemented, it may instead become a short-term market catalyst.

Analysts at the Malaysian Investment Bank also pointed out that the turnover rate in the third quarter also fell to 43% from 45% in the next quarter.

The Malaysian Stock Exchange's non-trading revenue rose 11.8% in the first nine months, surpassing the 5%-7% target previously set by management, mainly driven by growth in depository service revenue and data business revenue.

According to CIMC Securities analysts, this is mainly due to the increase in subscribers and higher subscription fees.

Based on the above, all three investment banks gave “keep” or “neutral” ratings. Industrial Bank and the Malaysian Investment Bank lowered their target prices to RM9.70 and RM9.10 respectively; however, CIMC raised its expectations for the Malaysian Stock Exchange and gave a target price of RM9.53.