Chairman's  Message

(extracted from Annual Report 2008)

Dear Shareholders,
This has been a year when Bursa Malaysia has had to rise to great challenges. We are weathering a storm in financial markets, the like of which has not been experienced in several decades. For most of 2008, the global economy seemed to occupy centre stage, rather than either domestic or world events. Fuelled by poor risk management practices, low quality assets and a liquidity crunch, we saw several prominent investment banks collapse, while other banks required significant government-backed rescue packages to stay afloat. Not long after this news, economic data showed that recession had taken hold in much of the developed world.

The Malaysian domestic economy has suffered some bruises, but I believe we are well placed to face the challenges of the coming months. However, like its global brethren, our stock market has reeled under the pressure. Weak sentiment and trading volume were reflected in the benchmark Kuala Lumpur Composite Index (KLCI), which retreated some 39% during the course of the year. Against this background, ambitious Key Performance Indicators (KPIs) for the year proved to be unattainable:

Equities Market Velocity: 2008 target: 56%; Actual: 34%
Growth of Derivatives Contracts: 2008 target: 50%; Actual: (1%)

Our financial results reflected market performance. Both revenue and profit declined significantly. Despite such adverse conditions, we held fast to our commitment to our shareholders and distributed dividend payout of 91% of our net profit. Overall, earnings per share for the year were 19.9 sen.

Looking after the long term interests of shareholders is, of course, our primary concern. This has translated into a decision by the Board to take a proactive, forward looking approach to our strategies. After an intense reassessment, we focused on initiatives that would increase our relevance in order to stay competitive to the fast evolving capital market landscape.

First, we must keep pace with our peers and increase Bursa Malaysia's overall competitiveness. This means adapting to the requirements of our customers by easing the process of transacting on our markets. A robust and resilient Bursa Malaysia will have a greater, more diverse product range and a broader issuer base. Stronger institutional and retail investor participation will be underpinned by effective, even-handed supervision and regulation. We will build strategic alliances and partnerships which enable Bursa Malaysia to follow a path to growth.

We will also differentiate Bursa Malaysia from its peers by creating a unique value proposition based on two key niches which we have identified. We believe we can build on our track record of innovation and grow Bursa Malaysia into a recognised Islamic financial and investment hub. The second string to this bow is our strength in derivatives and commodities, especially palm oil, on which we can leverage to firmly establish Bursa Malaysia as a centre for commodities trading.

By setting Bursa Malaysia apart from its peers, we aim to raise international participation in our market. We intend to open the way for foreign intermediaries to be active, which will induce greater foreign investor presence. Ultimately, the aim is to position Bursa Malaysia as a preferred destination to raise capital and invest.

To achieve these goals, we must continue to upgrade two key skill sets. Building supporting soft skills means additional investment in the development of our human capital and our capabilities to address and manage the changes which will accompany our development. Our hard skill set will consist of improved infrastructure. We must enhance our Information Technology (IT) capabilities and continue to upgrade technology, so as to stay at the leading edge when it comes to market efficiency. An important first step in this direction was the launch of our new trading platform, Bursa Trade Securities (BTS), on 1 December 2008. Speed, access, and greater functionality are key features of the system, which enhances our processing and execution capability and keeps us in line with leading global markets.

In addition, there are risks attached to this bold strategy, and I am sure we will be tested at times. However, financial markets will all be considering how best to make themselves attractive so that they can take full advantage when investor confidence begins to re-emerge. To be defensive now would leave us lagging behind at that crucial moment. Playing "catch-up" and rebuilding relevance is seldom an easy task. It would translate, at best, into delayed recovery in our overall performance.

We have a first rate management team in place at Bursa Malaysia, one which is working tirelessly to build products, key relationships, infrastructure and support systems needed for success. They are tackling the current challenges with tremendous commitment, and enjoy the Board's unwavering support.

We have attempted to set standards for corporate governance (CG) as a model Public Listed Company (PLC) and, this year, our efforts were rewarded. In April, Bursa Malaysia was recognised as one of the five best companies in Asia/Pacific and Africa in the area of CG practices by the Investor Relations Global Rankings (IRGR) 2008. In November 2008, for the third consecutive year since 2006, we took second position in the Overall Excellence for CG category awarded by the Minority Shareholder Watchdog Group (MSWG).

We have also built a good record of performance in terms of improved market depth, creativity in product development and better market efficiencies. We have also worked together with policy makers and regulators in support of the national agenda.

The resolve of the Board and Management which carried us this far is unabated and allows me to face with confidence whatever trials the future may bring. It has been the root of our intention to deliver commendable returns to you, our shareholders, and we remain tightly focused on that as an overriding objective.

Tun Mohamed Dzaiddin Haji Abdullah
Chairman