Bursa may see volatility in first half

January’s ADV started strongly at RM5 billion but on a m-o-m basis it moderated at +1 per cent, versus January 2020 with an increase of 20 per cent m-o-m. — AFP photo

KUCHING: There may be volatility for Bursa Malaysia Bhd (Bursa Malaysia) in the first half of financial year 2021 (1HFY21), although trading activities for FY21 are expected to taper, the trading level nevertheless could remain relatively robust.

The research arm of Kenanga Investment Bank Bhd (Kenanga Research) was of the view that 2021 will see a gradual tapering of trading activities albeit remaining relatively robust.

Kenanga Research recapped that January 2021 average daily trading value (ADV) started strongly at RM5 billion but on a month on month (m-o-m) basis it moderated at +1 per cent, versus January 2020 with an increase of 20 per cent m-o-m.

“We opined the market will see continued volatility given the risks of further wave of the pandemic and prolonged lockdown,” the research arm said.

“Given the low interest rate regime, domestic retailers’ participation is expected to be robust and boosted by the wide availability of efficient online trading platforms.

“ADV online trades grew 156 per cent to RM2 billion in 2020 with online trades accounting for 47 per cent in total trade value compared to 37 per cent in the 2019.

“Given the risk of new wave of pandemic coupled with challenging vaccine distribution, trading interests in healthcare, technology and industrial products, and services are likely to be sustained in the first half of 2021 (1H21).”

Meanwhile, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) expected some normalisation in trading activities in FY21 as effects from the Covid-19 pandemic starts to wane once the vaccination is under way.

“Certainly, FY20 had been an unprecedented year in more ways than one,” MIDF Research said.

“The situation had reinvigorated retail investors and it seems they continue to remain invested in the financial markets.

“This should bode well for Bursa’s performance this year.”

However, the research arm believed it will be difficult to sustain the same level of performance in the absence of the volatility swings we observed in FY20.

“We expect some normalisation in trading activities in FY21 as effects from the Covid-19 pandemic starts to wane once vaccination goes underway.

“We believe that the increase in trading interest last year was an exception rather than a ‘new’ normal and will normalise in FY21.

“This include its generous dividends as well. Having said that, we believe that it has already been priced in.”

As for AmInvestment Bank Bhd (AmInvestment Bank), the research firm expected markets to remain volatile in the near term.

The research firm recalled that with the rise in new Covid-19 cases and uncertainties on the duration of the latest lockdowns, volatility continued to persist in markets.

“The continued volatility bodes well for active trading in the securities and derivatives markets,” AmInvestment Bank said.

“We expect markets to remain volatile in the near term until there are clearer signs of a firmer economic recovery.”

 

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