BURSA MALAYSIA BERHADbursa.listedcompany.com/misc/CLSAInvestorForum_HK_22...Bursa Malaysia and its...
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BURSA MALAYSIA BERHADCLSA Investors’
Forum, Hong Kong
Dato’
Yusli
Mohamed Yusoff, CEO22 -
26 September 2008
Visit us at http://www.bursamalaysia.com
2
Clearing & Depository by :
Citibank & Deutsche
3 Markets:
Main Board : 637 cosSecond Board : 221 cosMESDAQ Market : 124 cos
9 Derivatives Products:
Commodity futuresEquity futures & optionsFinancial futures
Financial instruments:
Non-ringgit securitiesIslamic Sukuk crosslistings
Equities Market Derivatives Market Offshore Market
Trading
Clearing
Settlement
Depository
Trading
Clearing
Settlement
Listing
Clearing
Depository
Integration Across Products and Services
5 Bond Instruments:
M’sia Gov Securities*Gov Investment Issues*Central Bank PapersCagamas PapersPrivate Debt Securities
Order Matching*
Bond Market
(Trading)
Negotiation
Reporting
Single
Exchange
GroupTotal Market Capitalisation
: USD229 bn
(RM791 bn) @ 12 September 2008
3
1 Executive Director
7 Independent Non-Executive Directors
5 Public Interest Directors (also independent)
13 Members @ 12/9/200813 Members @ 12/9/2008
Board
Of Directors
And
Shareholdings
Structure
Substantial Shareholders @ 29/8/2008Substantial Shareholders @ 29/8/2008
Minister of Finance Inc.
Capital Market Development Fund
Newton
19%
19%
9.5%
Foreign Shareholding : 23%Foreign Shareholding : 23%
Market Cap of Bursa @ 12/9/2008 :RM3.4 bn (USD1.0 bn)
4
Operating
DriversImpacted By Continued Global Uncertainties And Local Market Sentiments
25,4
21
23,4
95
26,5
76
20,5
72
13,1
36159,019 161,544 125,051 121,775
115,569
0
5,000
10,000
15,000
20,000
25,000
30,000
1,01
1
1,02
6
2,45
4
1,91
2
1,53
2
35% 33%
61%45%
38%
0501001502002503003504004505005506006507007508008509009501000105011001150120012501300135014001450150015501600165017001750180018501900195020002050210021502200225023002350240024502500
Velocity (%)
Market Capitalisation
(RM tn)
Daily Average Trading VolumeOMT+DBT (bn)
Daily Average Trading ValueOMT+DBT (RM bn)
FY 2007
1H06 2H06 1H07 2H07 1H08
EQUITIES
24,635Daily Average Contracts 25,011
DERIVATIVES
(2)
%
(36)
(18)
(56)
(42)
53
Daily Average Contracts (units)Open Position
Daily Average Market Transacted Value –
OMT
(RM mn)Daily Average Market Transacted Volume –
OMT (mn
units)Turnover Velocity
%
1.1
1.6
2.4
YTD12 Sept 08
34
0.9
0.7
1.4
FY 2007
YTD12 Sept 08
5
Key
Ratios
Annualised
Return on Equity
EBITDA Margin
Net Profit Margin
Stable Revenue + Derivatives Income:Total Operating Expenses
% %2H071H08 1H07
18.4
50.7
37.8
83.7
25.1
58.3
46.8
74.0
31.7
69.4
50.7
87.9
%
(42)
(30)
(25)
(5)
(27)
(13)
(19)
(13)
1H08 vs. 1H07 CommentaryThe ratios are lower mainly due to the lower revenue from the equity market
6
Financial Results Overview
Commentary
• Decrease of revenue affected by continuing global & domestic uncertainties and inflationary pressures
1H071H08 2H07
164.1
83.1
90.3
96.3
25.6
70.7
13.5
239.2
165.9
80.2
186.0
50.8
135.2
26.0
204.0
118.9
92.2
133.0
27.6
105.5
20.1
%
(31)
(50)
13
(48)
(50)
(48)
(48)
(20)
(30)
(2)
(28)
(7)
(33)
(33)
Operating Revenue (mn)
EBITDA (mn)
Operating Expenses (mn)
Profit Before Tax (mn)
Taxation (mn)
Profit After Tax (mn)
Earnings per Share (sen)
RM %
7
33%52%
13%
2%
19%69%
10%
2%
Operating Revenue1H08: RM 164.1 mn
(USD 50.2 mn)
1H07
Trading Revenue (Equities)
Trading Revenue (Derivatives)
Stable Revenue
Other Operating Revenue*
1H08
84.9
22.0
53.5
3.7
86.8
12.9
23.0
1.6
86.8
12.9
23.0
1.6
%2H07
164.5
23.7
46.8
4.2
132.0
21.0
47.2
3.8
(48)
(7)
14
(12)
(36)
5
13
(3)
%RM mn
* Other Operating Revenue = perusal and processing fees
•Equity market performed poorer due to the bearish market and revision of clearing fee•Lower derivatives trading revenue due to decline in number of derivatives contracts from 3.2mn in 1H07 to 3.1mn in 1H08•Stable revenue increased due to higher listing and information services fees•Lower Other Operating Revenue due to lower perusal & processing fees
1H08 vs. 1H07 Commentary
1H07: RM 239.2 mn
(USD 69.2 mn)
8
Depository Services
Listing Fees
Information Services
Broker Services*
Participants’
Fees**
1H08
86.8
12.9
23.0
1.6
%
86.8
12.9
23.0
1.6
%2H071H0713.9
19.1
12.2
6.9
1.4
14.6
13.1
9.5
7.5
2.1
13.8
14.0
10.3
7.6
1.5
(5)
46
28
(8)
(33)
1
36
18
(9)
(7)
RM mn
* Broker Services comprises of Data Comm
equipment rental income from a fixed monthly rate** Participants’
Fees comprises of application/admission/initial/registration fees, participants’
subscriptions and renewal fees
Stable Revenue
23%
36%
26%
13%
2%
28%
31%
20%
5%
16%
1H08: RM 53.5 mn
(USD 16.4 mn) 1H07: RM 46.8 mn
(USD 13.5 mn)
1H08 vs. 1H07 Commentary•Higher listing fees due to full charge of listing fees in 2008 (50% rebate in 2007)•Higher information services fees due to revised fee structure in
October 2007•Lower broker services fees from reduction in number of terminals
at broker sites (Migration of old CDS system to web based system)•Lower depository fees due to lower transfer fee and additional issue fees (reduced corporate activities) •Lower participants’
fees due to the absence of MESDAQ advisors and sponsors applications in 1H08
9
Staff Costs
Market Development
IT Maintenance
Building Management Costs
Depreciation & Amortisation
Other OPEX
86.8
12.9
23.0
1.6
86.8
12.9
23.0
1.6
%
2H0741.8
6.4
7.4
4.5
7.0
13.1
43.6
11.8
6.0
4.8
7.1
18.9
% %1H071H0843.1
7.5
7.6
4.7
9.3
18.1
3
17
3
4
33
38
(1)
(36)
27
(2)
31
(4)
RM mn
Operating Expenses
48%
20%
8%
9%
10%
5%
1H08: RM 90.3 mn
(USD 27.6 mn) 1H07: RM 80.2 mn
(USD 23.2 mn)
8%
9%
6%
9%
16%
52%`
* Other OPEX = professional fees, administrative expenses, CDS consumables, etc.
1H08 vs. 1H07 Commentary•Increase in staff costs due to higher ESOS allocations, increase
in headcounts & annual salary increments•Higher depreciation due to newly acquired system upgrade, renovation & FMTP launch•Higher other OPEX is mainly due to higher professional fees paid
and bond impairment resulting from a weak bond market
10
Financial Resources Available for Use *
Shareholders’
Fund
Capital Expenditure
@ 30 June 2008
423
760
12
RM mn
Capital Management
130
233
4
USD $ mn
* Inclusive of RM64mn interim dividend paid in August 2008
11
Total Shareholders’
Return since listing till 12 Sept 2008 185%
% of dividend payout excluding special dividend & capital repayment
Dividend Payout > 90%
91%
91%
92%
FY05 FY06 FY07
81
1010
Interim Gross Dividend/Share
Final Gross Dividend/Share
Special Dividend
Capital Repayment
Historical Dividend Payout in sen
28
1412.5
28
25
32
1H0816.5
91%
Delivers Value To Shareholders
12
Velocity
Annual growth in derivatives contracts traded
56% 38%
Target 1H08
50% 0%
i
Bursa’s KPI 2008Challenged By Global And Domestic Climate
Targets
Initiatives:
USD Crude Palm Oil Futures
Continued Retail Education
DMA DerivativesBursa Trade Securities
Improvement of Infrastructure
Introduction of New Products
Other Initiatives
13
In The Pipeline…Initiatives To Enhance Market Attractiveness
DMA EquityCommodity Murabahah HouseAsean trading linkagesMulticurrency platformIslamic Securities Borrowing & LendingNegotiated Large Trades - Derivatives
Improvement of Infrastructure
Multicurrency ETFs
Thematic ETFs
Introduction of New Product
Commodity Futures Trading Commission’s ApprovalUnification of BoardsMarket Making
Other Initiative
14
EQUITIES MARKET
Challenging months ahead Investors’ sentiment expected to be impacted by slowing US and global economy, rising crude oil, commodities & food prices and domestic uncertaintiesGood opportunity for bargain huntingA shift to Islamic based investment products
DERIVATIVES MARKET
Expect continued interest in FCPO and FKLI FKLI: Interest to move in tandem with the expectations in the equity marketFCPO: Interest guided by expectations of supply and demand of CPO, priceof substitute products and environmental issues.
Outlook
BOND MARKET
No significant income expected due to availability of alternative OTC trading
15
ADDITIONAL INFORMATION
16
0.0291 0.0283 0.02950.0272
0.0226 0.0231
Q107 Q207 Q307 Q407 Q108 Q208
Note :
Clearing Fee revised to 0.03% (capped at RM1,000) effective 1 Jan 08 from 0.04% (capped at RM500)
% of retail trading participation by value
Effective Clearing Fee RateAffected By Institutional Bunching Of Trades And Lower Retail Participation
39% 35% 40% 33% 25% 24%
17
Market Valuation & Listed Companies
375
553
444 465 482
640722 695
849
945
1106 982
736 758798 816
865906
9631021
1027
987
Mar
ket V
alua
tion
(RM
b) Num
ber of Com
paniesMarket Valuation Total Listed Companies
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD 12 Sept 08
ShariahCompliant
Non- ShariahCompliant
85% or 66% in terms of market cap
840 Shariah Compliant Companies ; 85% (Mkt Cap USD155 bn) Source : ISBU
97%
1%1%
Main BoardSecond BoardMesdaqCall Warrants
Market Capitalisation USD229 bn (RM791 bn)
1%
97%
Main BoardSecond BoardMesdaqCall Warrants
No. of Counters Listed 1,283
804280
13663
Our Market Remains Competitive18 New Listings @ 12 September 2008
18
236%
206%
174%
150%
149%
141%
132%
116%
112%
89%
74%
69%
68%
65%
47%
40%
24%
Shenzen SE
NYSE
Korea Exchange
Taiw an SE Corp.
London SE
Tokyo SE
Euronext
Shanghai SE
Australian SE
Hong Kong Exchanges
National Stock Exchange India
Indonesia SE
The Stock Exchange of Thailand
Singapore Exchanges
New Zealand Exchange
Bursa Malaysia
Philliphine SE
Source: World Federation Exchanges (WFE)
Bursa’s Sustainable Velocity Target : 60% By 2010Turnover Velocity For The Past 12 Months To August 2008
40%
19
5%6%
25%
8%3%9%
42%
2%
5%
13%
4%
31%
1%4%
9%
10%
21%
2%Number of Listed Companies Market Capitalisation of KLCI Components
Industrial
TechnologyInfrastructure
Trading/Services
Construction
Others
Consumer Finance
PropertyPlantation
Diversity
Provides
ResilienceAs at 29 August 2008
20
Velocity
1372
797497
805 911
350 472748
2,179
1,438
874718
1019
19242057 53%
34%34%
25%32%34%
57%
33%
58%
23%20%
39%40%
57%
31%
0501001502002503003504004505005506006507007508008509009501000105011001150120012501300135014001450150015501600165017001750180018501900195020002050210021502200225023002350240024502500
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070%
10%
20%
30%
40%
50%
60%
70%
Daily Average Market Transacted Volume (million units)Daily Average Market Transacted Value (million RM)Turnover Velocity
12 Sept 08
21
910
2610
23032069
17511907
1186
909
1283
7821107
24%
31%
46%41%
50%54%
68%
39%
30% 27%
38%
-302070120170220270320370420470520570620670720770820870920970102010701120117012201270132013701420147015201570162016701720177018201870192019702020207021202170222022702320237024202470252025702620
Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q2080%
10%
20%
30%
40%
50%
60%
70%
80%
Daily Average Market Transacted Volume (million units)Daily Average Market Transacted Value (million RM)Turnover Velocity
July -12 Sept 08
Quarterly Velocity
22
Offers
The
Highest
Dividend
Yield
Selected Regional Markets - Dividend Yield
2.00%
2.93%
4.58%
4.62%
5.02%
5.08%
4.10%
1.54%
1.92%
4.65%
China (SHASHR)
Indonesia (JCI)
South Korea (Kospi)
Hong Kong (HSI)
Singapore (FSSTI)
Philippines (PCOMP)
Australia (AS30)
Thailand (SET)
Taiwan (TWSE)
Malaysia (KLCI)
Source: Bloomberg –
Dividend yield for main regional indices as at 29th
August 2008
23
Attractive
Market
P/E
Valuation
12.813.9
10.0
12.511.7 11.6 10.9 10.2
13.8 13.4 12.6 12.3 11.710.8
9.8
13.8
Hong Kong Indonesia Singapore Philippines Taiwan Malaysia South Korea Thailand
P/E Forward P/E
Source: Bloomberg - P/E Valuation for main regional indices as at 29th August 2008
24
Breakdown of trading (by value) 1993 to August 2008
Sustained Foreign Trading Reflects Market
Resilience
85%
82%
69% 81
%
76%
73% 83
%
78%
71%
68% 76
%
69%
63%
65%
63%
58%
15%
18%
31% 19
%
24%
27% 17
%
22%
32% 24%
31%
37%
35%
37%
42%29
%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
YTD Augu
st 0
8
Local Investors Foreign Investors
25
42%
45%
44% 54
%
44%
49% 59
%
54%
43%
40% 50
%
43%
29%
34%
37%
23%
51%
48%
45% 36
%
42% 43
% 35%
40%
51%
54% 45
%
53%
71%
66%
63%
77%
3%5%6%6% 6%6%7% 7% 11%
10%
14%
8%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
YTD Augu
st 08
Retail Institutions Others
Breakdown of trading (by value) 1993 to August 2008
Retail Participation
“Others”-
refers to trades conducted for accounts not belonging to individuals/ institutions. Definitions of investors’
type clarified in 2004, hence reducing the type of investor falling under “others”
category.
Drop In Retail Volume Due To Weak Investors’ Sentiment
26
Malaysian and Foreign Shareholdings as at 31 August 2008
Note : Foreign Nominees reflect shares owned by foreigners but held via Authorised
Nominee Companies incorporated in Malaysia.
ItemsAugust 2008
Total Shareholdings (Units-Bn) % Total Market Value (RM-Bn) %
1 ForeignersDirect Holdings 17.0 4.11 39.3 4.72
Foreign Nominees* 55.9 13.32 157.4 18.91
2 Malaysians 341.0 82.57 635.5 76.37
3 Total securities immobilised in CDS 413.0 100.00 832.2 100.00
Foreign
Ownership
At 23.6%
Foreign Shareholdings by Nationality for Selected Countries as at 31 August 2008
Foreign Nominees76.39%
Hong Kong1.39%United
Kingdom1.25%
Singapore8.05% Others
12. 36%
Mid-East0.14%
United States of Americas
0.42%
Foreign Ownership from Jan 07 – July 08
25.0
%
27.5
%
26.9
%
26.6
%
26.5
%
25.7
%
24.6
%
23.0%
23.5%
24.0%
24.5%
25.0%
25.5%
26.0%
26.5%
27.0%
27.5%
28.0%
Jan-0
7
Apr-07
Jul-0
7
Oct-07
Jan-0
8
Apr-08
Jul-0
8
27
20,9
46
22,8
4130,2
83
22,1
51
24,7
97
27,0
99
26,0
35
22,1
13
19,1
04
14,5
00
11,7
03
159,019 158,737 161,544
145,107
125,051131,795
121,775
162,638
115,569
96,002
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q2080
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Daily Average Derivatives Contracts Open Position
138,648
July - 12 Sept 08
Quarterly Derivatives Activity
28
KL Composite Index Futures (FKLI)
3-Month Kuala Lumpur Interbank Offered Rate Futures (FKB3)
Crude Palm Oil Futures (FCPO)
2 Leading
Derivatives
Products,
FKLI
& FCPO
Total contracts traded 1H 2008 = 3.1 mnTotal contracts traded 1H 2007 = 3.2 mn -5%
50%46%
4%
50%46%
4%
29
Derivatives
Market
Demography FKLI
* Local - A local participant is an individual who has been admitted as a participant in accordance with The Rules, registered with SC and has the right to trade for himself - all futures contracts listed on the Derivatives Exchange.
KLCI Futures
31%19% 14% 16% 16% 13% 15% 16%
45%48%
45% 43% 40% 40% 41% 42%
6%5% 3% 3% 2% 1%
14% 23% 31% 37% 40% 45% 42%3%
2%
41%
2001 2002 2003 2004 2005 2006 2007 YTD Aug 08
Locals Domestic Retail Domestic Institutions Foreign Institutions
30
* Local - A local participant is an individual who has been admitted as a participant in accordance with The Rules, registered with SC and has the right to trade for himself - all futures contracts listed on the Derivatives Exchange.
Derivatives
Market
Demography
FCPO
Locals Domestic Retail Domestic Institutions Foreign Institutions
Crude Palm Oil Futures
40% 38% 35% 33% 35% 31% 25% 27%
15% 21% 26% 24% 23% 27% 34% 37%
27% 21% 18% 20% 22% 25% 22% 14%
14% 14% 17% 20% 18% 16% 18% 21%
2001 2002 2003 2004 2005 2006 2007 YTD Aug 08
31
Bursa’s
Strong
Niche
In Islamic
Capital Market
Expertise
Brand
Infrastructure
• Islamic finance experts within Bursa Malaysia• Access to Shariah Advisory Council (SAC)
– Close collaboration with SC on Islamic Capital Market transaction and activities• Islamic Financial Services Board (IFSB), international standard-setting organisation for
the Islamic financial services industry• International Centre for Education in Islamic Finance established to develop the global
Islamic finance industry’s human capital• Involvement of leading Islamic finance academics and industry experts as advisors to
capital markets players
• Leading centre in Islamic banking– 11 standalone Islamic Banks (3 are foreign)
• Pioneer in Islamic finance• Islamic friendly
– Highly regarded by Islamic investors, with Middle Eastern liquidity favoring Malaysia over other developed markets
• Most established Shariah-compliant legal and regulatory framework• Tax exemptions for Islamic intermediaries
– Asset managers, banking products and Takaful companies• LFX as an offshore platform with significant Islamic finance activity
– Significant Sukuk activity– Potential offshore listing destination for Islamic finance products, with access to a
broad pool of investors
32
Dubai Gold & Commodities Exchange Development of derivatives markets
Multi Commodity Exchange of India Limited Development of commodities market and for cross listing of products
Dalian Commodities Exchange Joint organizing of “China International Oil and Oilseeds Conference”.
Australian Securities Exchange Facilitating communication channels and fostering relations
Singapore Exchange Derivatives Trading Limited Exploring future business relationship opportunities
NYSE Euronext
Technology Solutions Provider for equities, derivatives & DMA platform: Through NYX Advanced Trading Solutions
Global
Network
Korea Exchange Development of Financial Market Trading Platform
for the bond market in Bursa Malaysia
The Agricultural Futures Exchange of Thailand Development of commodities and futures markets
Ho Chi Minh City & Hanoi Securities Trading Centre Facilitating communication channels and fostering relations
Tokyo Stock Exchange Providing mutual cooperation on personnel training & information exchange
PT. Bursa Berjangka
Jakarta Development of futures and commodities markets
Hong Kong Exchanges & Clearing Sharing market surveillance information
33
Liberalisation
Efforts
– No
Capital Control
Accelerate tax restructuring: Reits
(10% local & foreign)
: Corporate tax (25% -
2009, 26% -
2008)
Liberalisation
of Foreign Listing & Dual Listing
No Capital Gains TaxNo Property Gains Tax
Re-introduction of regulated short selling (RSS) and stock borrowing & lending (SBL)
Admission of 5 foreign fund managers (Aberdeen, Nomura, BNP Paribas, Credit Agricole, Franklin Templeton Investments)
Admission of 5 foreign brokers (UBS, CLSA, CSFB, Macquarie, JP Morgan)
34
Sound Macro
Environment
CONDUCIVE DOMESTIC INTEREST RATESOvernight policy rate: 3.5%
REAL GROWTHProjected 4.5-5%
HIGHER INFLATION Now at 7-8%Annual CPI forecasted: 5%
NINTH MALAYSIAN PLAN UNDERWAYNew emphasis on key economic developments
STRENGTHENING RINGGITAppreciation of up to 15.8% since 2005
+-