Bursa stays bullish for FY2025 as fund managers hold record cash levels, forecasts return of foreign funds, IPO boom
Its chief executive officer, Datuk Fad'l Mohamed, said the projection remains amid strong liquidity from the domestic market and stable economic growth.
He pointed out that the target is part of Bursa Malaysia's headline key performance indicator for the year and sees its earnings would potentially come from its derivatives and non-trading revenues to remain strong in the second half of its FY2025.
Fad'l added that Bursa Malaysia anticipates a double-digit growth in its non-trading revenues over the next three years.
'Local investors, in particular, are noteworthy. I understand that many fund managers are currently holding cash. Data indicates that as of May, fund managers are holding approximately 11.5 per cent cash, which is the highest level since January 2024.
'We hope to see a greater level of trading activities once that cash is deployed,' he told reporters after announcing Bursa Malaysia's financial performance results for the first half of 2025 today.
Fad'l said a better performance for FY2025 would also be supported with favourable aspects such as the attractive valuation of FBM KLCI, which currently stood at a discount of 17 per cent to its 10-year mean.
He added that Bursa Malaysia is on track to capture 60 initial public offerings (IPOs) throughout 2025, with RM40.2 billion in total IPO market capitalisation.
He added that the preemptive move undertaken by Bank Negara Malaysia to reduce interest rates by 25 basis points would bring additional liquidity to the financial system, and the FBM KLCI would have an upside from its current level of 1,530.
In the first half of 2025, Bursa Malaysia recorded 32 IPOs, comprising six in the main market, 23 in ACE and three in LEAP.
Meanwhile, trading activities in Bursa Malaysia are expected to recover in the second half of 2025, supported by capital deployment from funds currently holding high levels of cash.
'A lot of it will be dependent on capital flows. And I think quite clearly, for us, we see that funds are already sitting on a lot of cash. So, they will want to deploy that cash,' said Fad'l.
He added that Bursa Malaysia still holds to the annual average daily trading value (ADV) consensus of RM2.6 billion.
Fad'l believes that foreign funds may return to the Malaysian market as current valuations present an attractive entry point and strategic imperatives begin to take shape.
He added that towards the end of last year, the bourse operator saw some movements with foreign funds that were looking to find safe havens.
'There was a lot of uncertainty towards the end of last year, including the Asean markets, which recorded foreign outflows. I think right now would be a good time, given where valuations are, for foreign funds to come back,' Fad'l said. — Bernama
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