KUALA LUMPUR: With Bursa Malaysia Bhd's 1QFY22 earnings coming in within analysts expectations, investors could now be looking forward to more upside catalysts for the stock exchange operator including the possibility of an early General Election.

       In a recent bourse filing, Bursa Malaysia posted 1Q22 profit after tax and minority interest of RM68mil, which was a decline of 44% year-on-year due to a steep drop in the average daily trading value (ADV) of securities.

       While the earnings results was as expected, Hong Leong Investment Bank (HLIB) research holds firm to its view that GE15 will be scheduled for the second half of the year, leading to trading upsides for the stock exchange.

       "With increasing probability of an early GE15 (we think in Aug-Oct), we believe investors will eventually start angling on Bursa," it said in a note.

       HLIB, which has a "buy" call on Bursa with a target price of RM7.95, noted that two out of the past three GEs had a positive effect on ADV during the election year.

       "We view Bursa as an apolitical election play – it benefits via ADV boost but without the 'political linkages' – making it a rather compelling investment proposition.

       "Looking ahead post GE15, we reckon that the market would react positively (alongside rejuvenated ADV) should the election outcome see the victor secure a convincing mandate – a plausible scenario considering the recent state polls in Johor, Melaka and Sarawak," it added.

       Meanwhile, Kenanga Research expects Bursa's FY22 ADV to remain firm against pre-Covid levels due to broadly higher trading interest amid the global and local uncertainties.

       This is despite its forecast that FY22 ADV (RM2.7bil) will remain softer than in the previous year (RM3.6bil).

       "Ongoing headlines include the Russia-Ukraine conflict and its spill-over impact to commodity prices; as well as expectations for rate hikes by both US Fed and Bank Negara Malaysia.

       "Ongoing economic recovery may also lead investors placing bets on potential strong performers and beneficiaries. As such, we reckon foreign investors may return to increase their allocation of Malaysian equities into their portfolios," said the research firm.

       Kenanga maintained "market perform" on the stock and raised its target price to RM7.06 from RM5.85 after rolling over its valuation base year to FY23 earnings per share.