Bursa Malaysia Berhad (BURSA) Earnings Call Transcript & Summary

And a very good afternoon to all our attendees, members of the media, ladies and gentlemen. On behalf of Bursa Malaysia, we welcome you to the media briefing of Bursa Malaysia's financial results for the first half of 2026. I am Izreen Fara Ismail, and I shall be your MC for today. We are pleased to have on hand today the leadership team who will take you through this afternoon session. Now please allow me to introduce you to Fadl Bin Mohamed, Chief Executive Officer of Bursa Malaysia; and Azizan Abdul Aziz, Chief Financial Officer of Bursa Malaysia. Ladies and gentlemen, today's briefing shall be in 2 parts. Firstly, Fadl Bin Mohamed will be presenting the key financial highlights and market performance, and this will be followed by the presentation on the financial review by Azizan Abdul Aziz. Following their respective presentations, we will move on to the Q&A session. Members of the media, ladies and gentlemen, before we begin today's briefing, please note that this briefing is being recorded and streamed live via Zoom as this is a hybrid session. [Operator Instructions] Fadl Bin Mohamed, the floor is now yours.

Thank you, Izreen. Good afternoon to everyone, and welcome to Bursa Malaysia Berhad's financial results briefing for the first half of 2026. The deck I will be presenting is now available on Bursa Malaysia's corporate website. We will be answering questions during the Q&A session after the presentation. We delivered a resilient set of results, underpinned by strong market activity, healthy fundraising momentum and execution of our strategic priorities. In terms of financial performance, operating revenue increased 19.6% year-on-year to MYR 411.7 million, driven by higher securities trading activity and listing fees. Profit after tax and minority interest, PATAMI grew 15.2% to MYR 144.6 million, while return on equity ROE improved to 35%, reflecting the resilient financial performance. From a business perspective, Malaysia's capital market continued to be vibrant with 36 IPOs raising MYR 5.4 billion and contributing MYR 26.1 billion in market capitalization, highest in ASEAN in terms of number of IPOs and funds raised. This demonstrates sustained confidence amongst companies seeking to raise capital and investors looking for quality investment opportunities. Beyond our core market performance, we continue to make good progress on several strategic initiatives. In the first half of 2026, we continue to expand market access and connectivity through new products and regional collaborations, strengthen Bursa Malaysia's position as a global leader in Islamic capital markets, advance our sustainability agenda and reinforce transparency and market integrity across our ecosystem. We are also proud to have achieved a significant milestone in our sustainability journey. Bursa Malaysia became the first Malaysian listed company to attain the highest possible score of 5.0 under the FTSE4GOOD ESG rating framework. This recognition reflects our long-standing commitment to embedding sustainability into our business and leading by example. This is our agenda for today. Let's begin with our financial highlights and market performance for the first half of 2026. Operating revenue grew to MYR 411.7 million, 19.6% higher year-on-year, driven by higher securities average daily value, ADV, and the increase in listing fees. Operating expenses rose to MYR 229 million, increased by 21% year-on-year to support the investment in talent and technology as well as the new regulatory fees. In line with the business performance, PATAMI grew by 15.2% year-on-year to MYR 144.6 million. The cost-to-income ratio is largely stable at 54%, demonstrating our ability to sustain operational efficiency while continuing to invest in talent and technology. ROE improved to 35% compared with 30% in the first half of 2025. EPS increased to MYR 0.179, up 15.5% year-on-year, consistent with the improved earnings in the first half of 2026. I'm pleased to share that the Board of Directors has approved and declared an interim dividend of MYR 0.165 per share for the financial year ending 31st December 2026. This amounts to approximately MYR 133.5 million, representing a dividend payout ratio of 92%, which is an improvement compared to the first half of last year. The entitlement date is 19th August 2026, while payment will be made on 27 August 2026. Based on the share price of MYR 8.50 on 30th June 2026, the interim dividend represents a dividend yield of 3.9%. Since our listing, total shareholder return is over 460%, reflecting the value created for shareholders over the long term. Over the past 5 years, our dividend payout ratio has been above 90%, consistently exceeding our policy of distributing no less than 75% of annual PATAMI. This underscores our commitment to delivering sustainable shareholder returns while continuing to invest in future growth opportunities. Turning to our securities market. First half of 2026 saw the ADV growing by 35% year-on-year to MYR 3.3 billion, reflecting robust trading activities despite ongoing geopolitical tensions. On IPO, we saw sustained momentum with 36 listings in the first half of 2026, raising MYR 5.4 billion in funds as at 30th June 2026 and contributing MYR 26.1 billion in IPO market capitalization, leading ASEAN in number of listings and funds raised. Of the 36 IPOs, the listing profile showcased the depth of our IPO pipeline with 5 main market, 25 ACE market and 6 lead market listings. The quality of our listing pipeline continues to be encouraging, supporting our confidence in sustaining the momentum across 2026. Overall, first half performance demonstrates resilient investor participation, healthy fundraising activity and continued confidence in Bursa Malaysia for capital raising and investment. In the derivatives market, average daily contracts ADC increased by 9.9% year-on-year to 106,518 contracts, largely driven by higher number of crude palm oil futures FCPO contracts traded, which grew by 10.7% year-on-year. FCPO contracts continued to drive the market, accounting for 84% of ADC traded. Looking at investor participation, foreign institutional investors remained dominant at 61%, with domestic institutional investor participation increased from 10% to 12% of total ADC. We also saw growth in our T+1 After-Hours Trading session. Average daily contracts traded during the extended session increased by 18.9% to 16,801 contracts. As a result, the contribution of After-Hours Trading to total ADC rose from 14.6% to 15.8%. Overall, the performance reflects continued market engagement and healthy liquidity in key derivative products. From the Islamic equities perspective, 81% of stocks listed on Bursa Malaysia are Sharia compliant, contributing MYR 1.4 trillion in Sharia market capitalization. Bursa Suq al-Sila BSAS ADV improved by 3.2% year-on-year to MYR 49.5 billion, mainly supported by the growth in domestic participants. As at 30th June 2026, BSAS has a total of 417 trading participants. Bursa Gold Dinar continued to record encouraging growth, driven by rising gold prices and greater awareness of the precious metal as an investment asset. The number of registered accounts grew by 80.1% year-on-year, bringing to a total of 177,723 registered users as at first half of 2026. Trading activity also increased with the value of gold transacted rising by 178.1% to MYR 200.5 million, while the total volume traded doubled to 326 kilograms. The performance of our Islamic market demonstrates the strength and relevance of Bursa Malaysia's Sharia-compliant investment ecosystem, supported by growing participation from investors. Now let me hand over the presentation to -- of the financial review section to our CFO, Azizan Abdul Aziz. Over to you.

Thank you, Dato, and a very good afternoon to everyone. It is a very good day to announce our results because tomorrow, I'll be completing my first year with Bursa. So hopefully, you enjoyed the listening [indiscernible] as well. This is something that was changed as well. Okay. Let me begin by outlining our year-on-year performance for the first quarter and also the second quarter, which is the first half of the year. Our operating revenue, of which approximately 63% is directly influenced by market performance, grew 22.9% year-on-year to MYR 200.8 million for the quarter and 19.6% year-on-year to MYR 411.7 million for the first half. The higher operating revenue is largely driven by higher securities ADV and annual listing fees. As for the operating expenses, we saw a year-on-year increase of 17.9% for the quarter and 21% for the first half, driven primarily by talent and technology-related investment and new regulatory fees. As a result of this movement, our first half of 2026 PATAMI increased by 15.2% and our cost-to-income ratio recorded a marginal increase of 1 percentage point to 54% compared to the first half of 2025. Now let me go through the details of these movements in the next 2 slides. For the first half of 2026, all of our trading segments recorded year-on-year growth of 20.7%. Securities trading is the largest contributor to the total at 45% with 26.9% increase year-on-year driven by higher securities trading activities. Derivative trading revenue, which represents approximately 14% of the group's total operating revenue saw an improvement of 5.2% year-on-year. BSAS's trading revenue has also shown an increase of 7.9% year-on-year in the first half of 2026. This is mainly due to higher trading activities attributable to our active engagements with both local and foreign participants. Our other trading revenue, mainly driven by Bursa Gold Dinar increased by 75.6% year-on-year, largely due to higher gold volume transacted. Anyone has not yet registered with our gold trading platform, please do so. It is an attractive platform, plus the price is very much attractive as well, okay? Likewise, our nontrading businesses also recorded healthy growth. The nontrading revenue, representing 37% of the total operating revenue improved by 17.6% year-on-year in the first half of 2026. The higher listing and issuer service fees, which saw a significant growth of 64.1% year-on-year was due to the revision in listing fees. Moving on to the breakdown of OpEx. Our OpEx for the first half of 2026 are higher year-on-year, driven by the continued investment in our talent and technology, which saw staff costs increased by 16.6% and technology costs by 6.4%. The increase also reflected the new regulatory fees, which are the main component of our other OpEx. Overall, we are vigilant in managing our costs. We're definitely starting from the place of strength while focusing on investing in future growth, strengthening market infrastructure and reinforcing cyber resilience, especially as we navigate dynamic and evolving market conditions. That's the end of my presentation. Over to you, Chief.

Thank you, Azizan. Now let's go through the strategic highlights for the first half of 2026. I'm pleased with the strong progress we made in the first half of 2026 in delivering our strategic road map 2024 to 2026 across all 5 strategic pillars. Malaysia's capital market continues to demonstrate resilience and vibrancy. To further broaden access to capital for smaller businesses and mid-tier companies, Bursa Malaysia and Securities Commission Malaysia jointly proposed enhancement to the LEAP market. The proposed enhancements include an alternative fundraising pathway for eligible ECF-funded and VC/PE-backed companies, simplified disclosure requirements, broader retail investor participation and a more seamless transfer from the lead market to the ACE market. Bursa Malaysia and the Securities Commission also introduced initiatives to strengthen the visibility and attractiveness of Malaysian public listed companies to both domestic and international investors. This includes the -- MY Value Up program, which aims to enhance market recognition of corporate performance and encourage long-term value creation, especially amongst companies above MYR 4 billion in market capitalization. Post the program launch on 20th April , workshops were conducted with the targeted companies. Following the MY Value Up Guide book launch on 9th of June, Bursa Malaysia has commenced a series of engagements with PLCs. The reception has been quite positive. We will continue to encourage and engage the targeted PLCs and look forward to their voluntary participation. In March 2026, Bursa Malaysia and FTSE Russell issued a consultation paper seeking market feedback on the proposed enhancements to the methodologies of the FTSE Bursa Malaysia KLCI, FBMKLCI and the FTSE Bursa Malaysia Mid-70 Index, FBM70. This consultation forms part of ongoing efforts to ensure that Malaysia's key equity benchmarks are relevant as the Malaysian equity markets grow in size, breadth and liquidity. In the derivatives market, we launched the Mini FTSE Bursa Malaysia KLCI Futures contract on 26th January 2026, providing a more affordable and accessible avenue for investors to participate in Malaysia's derivative market. Our Islamic capital market also continued to strengthen. Bursa Suq Al-Sila, BSAS expanded its global footprint to 32 countries and achieved a new record in total trading value. Meanwhile, Sharia ETFs recorded stronger momentum with assets under management growing 86% year-on-year. On the sustainability front, Bursa Malaysia achieved a significant milestone by becoming the first Malaysian listed company to attain the highest possible score of 5.0 under the FTSE4GOOD ESG ratings framework. This underscores our commitment in leading by example in sustainable business practices. In the second half of 2026, we are committed to 6 focus areas for the marketplace. Firstly, strengthen our role as Malaysia's key fundraising platform for businesses across all stages of growth and sectors; continue to enhance market vibrancy by broadening participation among retail and institutional investors. Leverage our Islamic capital market strength to sharpen our brand as a key marketplace for Sharia-compliant products, ramp up the exploration of data and technology-based opportunities, advance the sustainability agenda with continued emphasis on decarbonization, improve customer experience and strengthen market engagement through targeted customer-centric initiatives such as the development of MyBURSA mobile app. Key initiatives over the coming months include continuing to build a strong IPO pipeline, particularly larger listings that can enhance market debt, liquidity and investor interest, expanding our suite of exchange-traded funds ETFs to provide investors with greater access to innovative and thematic investment opportunities, including digital currency ETFs. Launching the inaugural Bursa Malaysia IR Awards 2026 in September to recognize listed issuers and market leaders that demonstrate excellence in investor relations, transparency and stakeholder engagements. Establishing a digital marketplace to simplify access of sustainability tools and solutions for our PLCs while unlocking new monetization opportunities through emerging technologies and capabilities, including artificial intelligence. Looking ahead, as part of the development of Bursa Malaysia's strategic road map 2027 to 2030, we are actively evaluating opportunities to accelerate the growth and vibrancy of our core markets while building more diversified and sustainable revenue streams. Key areas being pursued, accelerating the development of data, digital and technology-enabled growth opportunities to grow nontrading revenue, exploring opportunities in emerging areas such as tokenization and expansion of post-paid service offerings, assessing strategic partnerships that can broaden distribution reach and accelerate new growth areas. I would like to highlight on another recent development that supports the internationalization of Bursa Malaysia's capital market. The enhanced connectivity between Bursa Malaysia and Hong Kong Exchanges and Clearing, HKEX, which supports cross-listing between both markets. At the end of March 2026, Bursa Malaysia had signed a memorandum of understanding MOU with HKEX to deepen collaboration across listings, ETFs, indices, Islamic finance and carbon markets. An early milestone was the launch of the HKEX-Bursa Malaysia Large Cap Index, the first co-branded index between the 2 exchanges. HKEX recently added Bursa Malaysia as a recognized stock exchange, whereby eligible main market listed companies can apply for a secondary listing in Hong Kong whilst continuing to grow from their primary market. The recognition reflects confidence in Malaysia's regulatory standards, market infrastructure and governance framework. Last week, the Securities Commission Malaysia and Securities and Futures Commission of Hong Kong entered into a memorandum of understanding to further strengthen regulatory cooperation and market access between both markets. For investors, these collaborations will enhance the visibility and accessibility of Malaysian companies while supporting a wider range of investment opportunities across both markets. Mutual recognition and cross-listing of exchange-traded funds, ETFs and real estate investment trust REITs will broaden investment opportunities. At the same time, the simplified dual IPO listing framework under the collaboration will enable a single prospectus to be used by the eligible IPO companies to have both a primary and secondary listing launched concurrently on both markets. For example, Malaysian companies can have a Bursa Malaysia as their primary market and HKEX as their secondary listing market. Moving on to our headline KPIs for 2026. I am pleased to report that we are on track to achieve all our key targets for the year. In light of the strong IPO performance achieved in the first half of 2026 and our expectation that listing momentum will continue through the remainder of the year, we have revised our IPO market capitalization target upwards to MYR 34 billion. This upward revision is underpinned by strong issuer interest across a broad range of sectors, including health care, consumer and technology and healthy investor demand supported by sustained participation from both retail and institutional investors. The revised target reflects our confidence in the strength of the IPO pipeline, the continued depth of investor interest and the overall resilience of Malaysia's capital market. Looking ahead, Malaysia's economic fundamentals continue to be supportive, despite ongoing geopolitical tensions. Based on Bank Negara Malaysia, 2026 GDP growth is expected to be within the range of 4% to 5%, supported by resilient domestic demand and continued expansion in the technology sector. Inflation is well contained within the expected range, while Bank Negara Malaysia has maintained the overnight policy rate at 2.75%, providing a stable monetary policy environment for the economy. Economic growth is expected to be resilient, but we are mindful of external risks, particularly ongoing political tensions, supply chain disruptions, higher energy and commodity prices and potential tightening of global financial conditions. On Malaysian equity markets, FBMKLCI continues to be resilient with forward P/E ratio of 15.4x, trading at a discount to its 10-year average of 15.8x. Overall, while geopolitical and macroeconomic uncertainties remain part of the landscape, we believe Malaysia is well positioned to navigate these challenges supported by resilient domestic fundamentals and healthy capital market activity. [Foreign Language] And I now hand the session back to our MC.

Thank you. Now we proceed to the Q&A session with our team panelist. [Operator Instructions] Do we have our first question from the floor, please?

I'm [indiscernible] from DFM. So you've just raised your IPO market capitalization target, right? But the FBMKLCI remains well below its 52-week high or rather relatively subdued. So my question to you is, why isn't the strength in the primary market translating into stronger secondary market performance? And what would need to change for the KLCI to improve in the second half of the year? That's my first question. And for my second question, with the U.S. imposing a 10% tariff on Malaysian exports effective last week, have you seen changes in foreign investor flows or U.S. export sectors? And could Malaysia's relatively favorable tariffs compared to regional peers become a catalyst for the FBMKLCI moving forward?

Your second question again, repeat that.

Yes. So with the U.S. imposing a 10% tariff last week, have you seen changes in foreign investor flows or U.S. export sectors? And could Malaysia's favorable tariff rate compared to regional peers improve the FBMKLCI moving forward?

Thank you. Thanks for the question. Maybe the first question in relation to the IPO momentum. I think the IPO momentum continues to push on. And you are saying -- you're asking the -- in terms of the trading activities, which has actually subdued, you're saying that, yes. So I think the way we see it is market is very rotational. And I think we have various different factors that actually drives the trading activity. And I think one of the things that we have seen is that -- as you will know that from a foreign investor participation, for example, you've seen rotations. And I think recently, we saw very high activities and very high flows into markets such as Taiwan and South Korea, particularly at the back of tech-related stocks and tech-related growth that we saw. And I think one of the things that we see markets are continuing to be rotational. So as we speak today and given that we've seen a little bit of correction in the tech-related stocks, we are today seeing flows coming back to Malaysia. So for the month of July, we are positive foreign flows into Malaysia, particularly going back into stocks which are actually defensive. We see investors flowing capital back into stocks which are actually very much more giving them the stability of yields, particularly in sectors such as banking and utilities. So as a market, we provide that diversification for investors. Now if you look at IPO activities and why that differentiates is IPO activities are driven by different sets of factors. And I think you see quality of issuers, you see companies requiring to raise capital to grow their business and strong IPO pipeline can coexist irrespective of how secondary market performance are. And I think secondary market performance, as I mentioned earlier, are very much exposed to very different types of movements, so daily movements in global yield, dollar, foreign fund flows, as I mentioned also, and broader risk sentiment. And I think trading interest also remains selective. As we can see today, it varies across sectors, and it also varies across company specifics that investors are looking at. So for us, the key for us in terms of -- when we look at the market, the key for us is not just about the number of listings, but the type of quality of companies that we bring to the market. We want to be able to see credible, we want to be able to see companies that grow using -- with the Bursa Malaysia platform. And we want to also build a credible investor base. So we will continue to push on the quality, the liquidity, investor engagement. But I just want to answer your question just now also in terms of what are the things that we are doing to ensure that we get stronger activities in the second half of the year. I think for us, one of the programs that we're pushing very hard is the My Value Up program. And the My Value Up program today have already built traction. We see a lot of companies showing interest to participate in this program, though voluntary at this stage. But I see that it is a program that will put companies to be able to articulate clearly their long-term value creation plan, to be able to articulate clearly to investors and to support investors to value the company appropriately and to be able to gain traction, particularly amongst institutional investors. So that's one of the activities that we continue to push. The other is, of course, investor engagement. So through our flagship programs, as most of you know, we have InvestMalaysia. But in addition to InvestMalaysia, we have multiple other programs that we work together with our market participants to have engagements between companies and investors. And we want to be able to drive that continuous engagement and to be able to have better visibility for our companies. The third area that we continue to push is we are seeing a lot of tractions amongst investors for tech and tech-related space. So I think some of you would have seen the performance of SkyeChip. Recently, there was another company in the tech sector also that got listed that we saw very strong momentum in terms of investor interest. So one of the areas that we feel that we need to strengthen and put a greater emphasis and build a lot more interest is actually to be able to bring tech-related stocks on to our market. So we want -- and we see strong investor appetite in this space because every time there is a fundraising for a tech-related company, we see strong demand. We saw -- we see multiple times book and oversubscription. So this is an area which I think -- and it's at the back of real demand. At the end of the day, we are in what I would call a tech super cycle where the underlying demand for tech-related AI-related requirements are high. So that will continue to push a lot of the momentum for companies to raise capital.

Do we have another question from the floor? If you could raise your hand. Yes, we do. The name and organization, sir.

Hi, I'm [ Shah ] from [indiscernible]. Bursa Malaysia have increasing the IPO market capitalization target from MYR 28 billion to MYR 34 billion. So does this mean we can expect some largest IPO in the second half year? So about how many largest IPO are you expecting?

Okay. So what I will say is that as we are today, year-to-date, we have exceeded our whole year market capitalization for 2025. So it is only correct for us to come to market today to adjust our market capitalization higher. And the increase in the market capitalization very much lies at the back of what we see from the pipeline. The pipeline is very encouraging, very promising, both in terms of large caps and also our ACE market, our mid-cap companies. So we continue to see a very strong pipeline there and some -- and submissions have also come in already. So hence, on that basis, we see. We hope to see a couple of large IPOs in the second half. And I'm confident to say that we should be able to have 1 or 2 large IPOs in the second half. Thank you.

Thank you. I hope that answers your question, Chair. Do you have another question from the floor?

Hi, [indiscernible]. So the FTSE Russell has proposed expanding the FBMKLCI from 30 to 50 constituents to improve the market representation and reduce the concentration risk. So what is Bursa Malaysia's view on this proposal? And how do you expect it will impact the market liquidity, institutional investment flows and the overall effectiveness of the Malaysian equity market?

So the intention of the expansion from 30 to 50 constituents is intended to reflect better coverage of the Malaysian market capitalization. So currently, the 30 constituents only cover about 59% of the total main market capitalization. But when we increase to 50 constituents, it will cover up to 70%. So we want it to be a lot more expanded to improve sector representation and also reduce concentration risk on a few sectors, particularly financial services. So we wanted it to be a little bit more expanded. And I think today, financial services is about 43% of the KLCI. So it probably come down. We are looking at it to come down a little bit into the mid-30s and then broaden out the other sectors like technology, energy and REITs. So we want that to be expanded. So it gives you a bit more balanced representative benchmark whilst preserving FBMKLCI's role as the premier market benchmark. And this also aligns to global standards. So large cap benchmark practices in other markets and also strengthened representation so of the Malaysian equity market. So we -- there was a consultation sent out, and we've received very broad support from key stakeholders, particularly also from the institutional domestic investors. So we are positive about it. Thank you.

Thank you. We have a question from the back. No, from the front and then later on from the back.

Hi, My name is [indiscernible]. I have 2 questions. Just now you mentioned that operating expenses spiked to 21% in the first half. So is this elevated cost structure a permanent baseline or a temporary peak? And my second question is, given the recent USD 2 trillion crash in South Korea stock, what circuit break or rules protect Bursa Malaysia from similar retail leverage?

Maybe I'll take the second one first. We saw the situation in Korea in cost fee. So I guess, for us, we have similar circuit breakers in situations like that has come in. But I think -- I can't remember. I don't think we've used it for a long time. [ Yhui ]. We have not -- when was the last time we used a circuit breaker? Yes, it was a long time. It's been a long time. So we have not used a circuit breaker for a long time. So -- and I think for Malaysia, we're a little bit more fortunate, because our -- we have a very strong domestic institutional base. And the domestic institutional base allows for us to kind of cushion any particular sell-down or any particular volatility. So I think we see that even during the most challenging times, we see a very strong domestic institutional investor base coming through. By saying all that, I must say that we have been a very -- it's been a very active market. We see retail investors about close to 30% in our market. We see domestic institutional at about 40% and foreign institutional participation in our market has been around 30% or so. So we are quite well balanced in terms of market participation. I'll pass over the first question to...

Thanks for the question. In terms of the elevated OpEx for the first half of this year as compared to the first half of last year. It is expected and then we already budgeted this amount. And then it's not come with a surprise basically. And the other part that we would like to mention also, it is a combination, right? First, of course, you need to have some investment in terms of your infrastructure as well as your IT infrastructure. So that's the must. And it can come from a CapEx then to OpEx from a depreciation perspective. But the other part is we need to keep on investing and retaining our people as well. And of course, this can be cost. But like I said, it is expected, and it is within the discipline that we are maintaining and retention of our people, that's quite important as well. So yes, it is expected. Yes.

Shall we have the next question from the floor?