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CHIEF EXECUTIVE OFFICER'S MESSAGE
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While Bursa Malaysia was placed in the global
spotlight with the unfolding of three of the
world's biggest IPOs, our real deliveries in 2012
ran far deeper, and were less discernible to the
outsider's eye. The year was exciting for the
main reason that we successfully implemented
numerous projects and initiatives that have
strengthened Bursa Malaysia at a fundamental
level. Yet, like all far-reaching changes, these
have gestation periods and their full effects will
materialise only in the years to come. So, just
as 2012 was a year in which we made a mark
internationally, internally we feel confident of
being in a better shape to capitalise on future
opportunities.
Dato' Tajuddin Bin Atan Chief Executive Officer |
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"The fact is, the industry is changing in unprecedented ways and has now
entered a 'New Norm'. Trading is becoming increasingly borderless as
markets liberalise, while an increasing number of companies, Malaysian
organisations included, are going multinational. To establish a strong
presence in this highly competitive environment, we are revitalising our
systems and processes to create a more facilitative exchange, and are
bringing in more talent with the right skill sets to tap into current and
future opportunities. Meanwhile, we continue to engage actively with our
various stakeholders to ensure a fair and orderly market.
Despite a challenging global economy, ASEAN markets in general were
robust, boosted by strong internal demand. As the three mega IPOs
indicate, our top PLCs were able to shine in a domestic environment that
stood to benefit from initiatives such as the Government Transformation
Programme (GTP) and Economic Transformation Programme (ETP). Given
their performance, our market capitalisation grew 14% to reach RM1.47
trillion, a new record. On the derivatives front, too, we achieved a new
record in terms of open interest for all products.
In short, I am pleased with the progress we made during the year. Not
only have we put in place the building blocks to leverage on growth of the
ASEAN marketplace, but we have also produced commendable financial
results, which I have great pleasure in sharing with you." |
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FINANCIAL PERFORMANCE
Bursa Malaysia pulled in a positive performance for the financial year
ended 31 December 2012, registering profit after tax and minority
interest (PATAMI) of RM151.5 million. This 4% increase from our PATAMI
of RM146.2 million in 2011 was due principally to improvements in our
stable revenue and derivatives trading revenue.
Stable revenue increased by 13% to RM127.4 million from RM112.8
million in 2011 due to a combination of factors. The listing of the three
mega IPOs in 2012 contributed significantly to the increase in the
revenue from depository services. The substantial growth in the number
of structured warrants listed to 551 from 363 in 2011 resulted in higher
listing fees. Additionally, the higher stable revenue was also boosted by
the increase in sales of information.
As we had expected, our derivatives market continued along its
expansionary journey following migration onto the Globex trading
platform, and was even described by the editor of Futures and Options
World (FOW) as "one of the most exciting derivative markets globally".
This was substantiated by a 9% increase in revenue from RM51.2 million
to RM56.0 million, as the volume of derivatives traded grew 14% from
8.4 million contracts to 9.6 million contracts.
While bolstering our revenue by growing our stable income and derivatives
business, we have also ensured fiscal responsibility. This is evident in the
figures: over the last four years, we achieved 30% revenue growth while
expenses grew by only 15%.
During a year in which global trading value was down 22%, trading on
Bursa Malaysia dipped only by 7%, translated to a drop in daily trading
value in securities from RM1.79 billion to RM1.67 billion. As a result,
our trading revenue decreased from RM193.0 million to RM178.3 million.
More positively, the successful mega IPOs of Felda Global Ventures
Holdings Berhad, IHH Healthcare Berhad and Astro Malaysia Holdings
Berhad contributed to an expansion of our market capitalisation to
RM1.47 trillion from RM1.29 trillion.
Bursa Malaysia also reaffirmed our prominence as the world's leading
sukuk listing destination with an 18% increase in the value of programmes
listed from USD28.5 billion in 2011 to USD33.7 billion in 2012. At the
same time, Bursa Suq Al-Sila' (BSAS) recorded an impressive 89%
increase in its average daily trading value to RM2.3 billion from RM1.2
billion, following growing acceptance among global market participants.
Given our financial performance, we are proposing a final dividend of
13.5 sen which, combined with the 13.5 sen interim dividend paid in
August, totals to a full-year dividend of 27 sen. This represents a payout
of 95% of our net profit, and means that we are once again looking to
reward our shareholders beyond our dividend promise of 75% minimum
payout.
MARKET HIGHLIGHT
A definite highlight of the year was hosting the three earlier-mentioned
mega IPOs, which earned Bursa Malaysia a spot on the international
capital market space. These listings were indicative of investor confidence
in our top-performing PLCs, which was further reflected in the FBM KLCI
hitting a number of new highs from July onwards and closing the year
at 1,688.95 points, a significant 158.22 points higher than the previous
year-end's 1,530.73 points.
Another highlight was being able to step up our linkages within the
regional market when, together with the Singapore Exchange (SGX) and,
later, The Stock Exchange of Thailand (SET), we connected our trading
platforms via the ASEAN Trading Link. Our grouping brings together
2,250 listed companies with a market capitalisation of USD1.6 trillion,
representing approximately 70% of the total market capitalisation of
ASEAN.
Ahead of the launch of the ASEAN Trading Link, IHH Healthcare Berhad
opted to enhance its profiling by dual listing on the Main Boards of Bursa
Malaysia and SGX on 25 July 2012. The listing is fully fungible, allowing
shareholders to transfer their shares between both Exchanges via a
standard cross transfer mechanism. This marked an exciting milestone
for us as it was the first simultaneous dual listing to be conducted on our
Exchange.
It was also a memorable year for our derivatives market, which truly rode
on a high. Other than its impressive open interest record, it continued
to attract more foreign participants via the Globex trading platform as
well as bring us greater recognition. During the financial year, Futures
& Options World presented our derivatives segment the Best Technology
Innovation by an Asian Exchange award while naming it a runner-up for
the Asian Derivatives Exchange of the Year. The publication cited easy
accessibility and global connectivity of the Malaysian derivatives market
as key factors that led to these wins.
Our Islamic markets continued to hold their own, further reinforcing Bursa
Malaysia as an integrated exchange offering both conventional and niche
products. Thanks to the continuous efforts of our team, we retained our
leadership position as the premier sukuk listing destination for the fourth
consecutive year, with 20 programmes undertaken by 17 issuers.
CREATING A VIBRANT MARKETPLACE
We are fully cognisant of the challenges of the brave new globalised and
digitalised world, in which traditional protective barriers are no longer
recognised, and only the fittest can survive. We are therefore building
on our foundations to enter this uncompromising realm. As we boost
our ecosystem and create a more dynamic exchange, we are better
positioned to catalyse further growth of corporate Malaysia.
Our vision is to serve not just as an effective Malaysian bourse, but as
the preferred ASEAN multinational marketplace. To achieve this vision,
we recognise the need to embody all the virtues of a high-performance
organisation. In 2012, therefore, we developed four Strategic Intents to
build on our inherent strengths and take us forward. These are:
- to create a more facilitative trading environment;
- to facilitate more tradable alternatives;
- to reshape the market structure and framework; and
- to become a regional marketplace with global access.
Towards creating a facilitative trading environment, we have invested in
various technologies to improve the exchange ecosystem in a holistic
manner, initiating domino-effect change from the front end to the back
room and vice versa, thus enhancing the entire value chain of trading,
clearing, settlement and depository.
In the securities market, we introduced new order and validity types
which enable participants to execute a greater variety of trading and
risk management strategies. When keying in orders now, for example, brokers can use Market to Limit order, Fill and Kill, and minimum quantity. Other innovations included introducing CDS Straight Through Processing
and extending our eCash payments framework. To further expand our
accessibility and reach, we have also revamped our website to be more
user-friendly.
The derivatives space was enhanced by the implementation of a new
clearing system which has greater capacity for trade volume and for
handling more complex products. This system also incorporates better
risk management capabilities to protect investors.
In terms of new products, we further entrenched our leadership position in
the palm oil market with the launch of Options on Crude Palm Oil futures
(OCPO), the first commodity options in Asia. The derivatives market was
also enriched by the re-launch of options on FKLI (OKLI). Meanwhile, BSAS
saw the addition of RBD Palm Olein as one of its commodity offerings.
As our marketplace evolves with the addition of more products of greater
complexity, we acknowledge the need for a more sophisticated system
to protect our market integrity and our investors. Hence on 31 December
2012, we introduced a new Surveillance System which helps to improve
the quality of both our securities and derivatives markets.
Our efforts to reshape the market structure and framework are geared
towards removing barriers in order to create greater activity and
liquidity. Towards this end, we introduced referral agent activities and
a dual licencing fast-track programme; eased the entry requirements
for derivatives trading; and are now allowing futures brokers to set up
branches and kiosks to expand their reach.
To profile our PLCs and elevate the Malaysian capital market
internationally, we have been conducting the successful Invest Malaysia
programme, in Kuala Lumpur and Hong Kong, every year. At the 2012
events, we positioned Bursa Malaysia as a key driver of the ASEAN
market. ASEAN, with a population of 600 million, is one of the world's
most vibrant economic regions, with projected GDP growth of 5.5%
through to 2017 according to the Organisation for Economic Co-operation
and Development (OECD). We intend to leverage on this growth to create
greater visibility on the international front.
We have already made headway in this regard in both the derivatives and
Islamic markets, where we are gaining recognition for offering quality
products and services.
Derivatives trade by foreign institutions increased from 31% in 2011 to
36%, and we are hopeful of further boosting this figure upon clearance
from the Commodity Futures Trading Commission (CFTC) for US traders to
have direct market access to the Globex trading platform. In our Islamic
markets, no less than a quarter of the trading participants are foreign,
and trade by foreign participants on BSAS increased from 21% in 2011
to 30%. Our credentials as a sukuk listing destination, meanwhile, are
second to none as we uphold our status as the premier sukuk listing
destination for the fourth consecutive year.
PROTECTING THE INTEGRITY OF OUR MARKETPLACE
As a regulator, we serve to ensure a high level of integrity in the
marketplace in order to protect our investors. In carrying out this function,
we constantly update our regulatory framework so that it remains
relevant to support developments taking place regionally.
In advance of launching the Exchange Traded Bonds and Sukuk (ETBS) in
February 2013, we changed our Listing Requirements to permit the listing
of bonds and sukuk by a larger base of issuers that includes non-listed
companies. We further amended the Listing Requirements to support
the Securities Commission's Corporate Governance Blueprint 2011 and
Malaysian Code on Corporate Governance 2012 by strengthening board
quality and enhancing transparency in listed companies' governance
practices. To accommodate the new products launched on our derivatives
market, we also made relevant changes to the Bursa Derivatives Rules.
PROSPECTS FOR 2013 AND BEYOND
The overall outlook for Malaysia is anticipated to be marginally better in
2013 than it was in 2012 given the country's economic prospects and
business fundamentals, despite on-going global uncertainties. Malaysia's
strong domestic demand will continue to drive growth, supported by
catalytic initiatives under the GTP and ETP.
These will cushion the global impact on our securities market, which
we will continue to build by further enhancing our infrastructure and
introducing new asset classes. The year has already begun on a high
note with the listing on 8 February of our first ETBS, issued by DanaInfra
Nasional Berhad. With the Guidelines issued on Business Trust late 2012,
we can look forward to additional options for fund raising exercises and
investments.
We also aim to expand our retail reach via the Internet, and build a strong
cadre of investors by targeting those who have just entered the workforce
as well as the current population who are not active investors. The idea
is to reach out to potential investors and keep them informed of the wide
range of investment opportunities, products and services that Bursa
Malaysia has to offer.
While our derivatives market has been growing from strength to strength
over the last few years, we will continue to develop it by further widening
our distribution channels and increasing the breadth and depth of our
product offerings. As an example, we plan to leverage on our entrenched
position in palm oil trading by creating new tradable options such as
futures in refined palm oil.
A major challenge in the Islamic markets is acceptance of our products
internationally. To overcome this, we intensify our product innovations
and offerings to meet the international Shari'ah standards through
continuous consultation and engagement with industry players. This is
also supported by more focused marketing and educational efforts.
We recognise that our onward journey will be challenging yet, having
implemented several mission-critical projects in 2012, we are confident
of our potential once the market picks up. In 2012, we made a good start
towards becoming an exchange to be reckoned with, and are determined
to continue to push the envelope to serve not just Malaysian issuers and
investors, but also those from the region and beyond so as to establish
ourselves as ASEAN's leading marketplace. |
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Dato’ Tajuddin bin Atan
Chief Executive Officer |
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