KLSE changed its financial year end to 31 December from 30 June via approved members' resolution in 2002. The objective of the change to a calendar year basis is to streamline the exchange's financial year end with other relevant regulators in Malaysia, for consistency in reporting requirements. The change also facilitates comparison and benchmarking of KLSE by investors, shareholders and other market participants, with other exchanges internationally, many of which have 31 December as their financial year end.
Commenting on the results for the 18 months ended 31 December 2002, Executive Chairman of KLSE Dato' Mohd Azlan Hashim said vis-à-vis other markets, generally KLSE was similarly influenced by prevailing conditions of uncertainty and the relatively cautious view adopted by investors, towards market risks.
"However, we observe that the Kuala Lumpur Stock Exchange performed steadily in these challenging times, with the KLSE Composite Index closing 2002 on the positive - up 53.3 points to 646.32 points as at 31 December 2002 compared to 592.99 points as at the previous financial year ended 30 June 2001.
"Market Capitalisation as at 31 December 2002 was recorded at RM 481.6 billion up 19% from RM403.5 billion as at 30 June 2001. Average daily volume of shares traded increased significantly by 96% to 274.0 million shares per day for the period to 31 December 2002 compared to an average daily volume of only 140.0 million shares per day for the previous financial year to 30 June 2001. Average daily value traded increased 43% to RM520.8 million per day for the period to 31 December 2002 compared to RM364.3 million per day for the previous financial year to 30 June 2001.
"During the period under review, KLSE continued to focus on its core competencies in facilitating the raising of capital, with emphasis on improving efficiency and cost effectiveness. Total funds mobilised for the financial period ended 31 December 2002 was RM13.7 billion compared to RM4.1 billion for the financial year ended 30 June 2001. Of the RM13.7 billion, RM7.1 billion was raised from initial public offers whilst RM6.6 billion was raised from existing companies.
"KLSE continued to attract many new quality listings. A total of 57 companies were listed on the KLSE for the financial period ended 31December 2002, compared to 36 for the previous financial year ended 30 June 2001. Of the 57 new listings, 22 companies were listed on the Main Board, 28 companies on the Second Board and 7 companies on the MESDAQ Market. This brings the total number of companies listed on KLSE to 865 companies as at 31 December 2002 compared to 809 companies as at 30 June 2001," Mohd Azlan said.
On KLSE's financial performance, at company level, KLSE recorded a surplus before tax of RM60.0 million for the financial period ended 31December 2002 as compared to RM26.1 million for the financial year ended 30 June 2001, showing an increase of RM33.9 million or 130%.
This was achieved based on an increase of RM112.4 million or 70% in total revenue amounting to RM273.4 million for the financial period ended 31December 2002 as compared to RM161.0 million for the financial year ended 30 June 2001. A significant reason for the surplus was an increase in dividends and gains in fixed income investments.
At group level, KLSE recorded a surplus before tax of RM30.7 million for the financial period ended 31December 2002 as compared to RM56.0 million for the financial year ended 30 June 2001, a reduction of RM25.3 million or 45%.
Commenting on the financial performance, Executive Chairman Dato' Mohd Azlan Hashim said apart from market performance, on-going industry enhancement efforts also had an impact on financial performance. The KLSE Group has also fully adopted Malaysian Accounting Standards Board (MASB) 23, resulting in provision for impairment of assets amounting to RM28.2 million.
"Measures to enhance the industry and market were made during the period under review which clearly had an impact on revenue.
"These measures have to be in place to ensure the cost competitiveness of the Malaysian market and to prepare the foundation for longer term growth and consolidation for market and industry.
These included measures such as the reduction of the clearing fees from 0.05% to 0.04% (subject to a cap of RM200 per contract) whilst SCORE* fees was reduced from 0.005% to 0.0025% effective 1 July 2001. Additionally, subscription fee of RM250 per month for dealers' representatives was also waived with effect from 1 July 2001, thus forgoing over RM20 million annually in revenue.
*(SCORE: System on Computerised Order Routing and Execution).
"It is also significant to note that KLSE continued to fund industry development through ongoing enhancement of market infrastructure facilities as well as expanding market promotion to ensure the Malaysian market remains competitive and attractive for all participants," Mohd Azlan added.
In contributing towards a more efficient investment environment, KLSE continued to make capital investments to enhance market infrastructure in trading, clearing and settlement operations.
These initiatives include:
- The migration from floor trading to screen based trading for Crude Palm Oil contracts and Kuala Lumpur Inter-bank Offered Rates futures in December 2001 as a result of the merger between the Commodity and Monetary Exchange of Malaysia (COMMEX) and Kuala Lumpur Options and Financial Futures Exchange Bhd (KLOFFE) to establish the Malaysia Derivatives Exchange Bhd (MDEX) in 30 June 2001 as a comprehensive derivatives exchange.
- The consolidation of the MESDAQ Market trading operations on to SCORE with the completion of the MESDAQ merger and the establishment of the MESDAQ Market on KLSE in March 2002 to enhance accessibility to investors and to expand the breadth and depth of investment opportunities at KLSE.
- The implementation of the circuit breaker mechanism to address possible excessive volatility in March 2002.
- The standardisation of board lots to 100 units to eliminate multiple board lots, reduce incidences of holdings in odd lots and to enhance investor participation. The standardisation is targeted for full completion by June 2003.
"Given on-going developments affecting growth opportunities worldwide and in Malaysia, what makes a difference is whether our market is capable of retaining interest and continuing to create value.
"Towards this end, the significant effort to demutualise the KLSE is being actively pursued.
"To demutualise will enable the KLSE Group to effectively broaden its interests and capability to better represent the needs and requirements of all stakeholders in the capital market and securities industry. To demutualise will enable the KLSE Group to better compete for capital, for growth and for ideas," Mohd Azlan added.
Mohd Azlan said the collective effort towards global and regional recovery is expected to continue with the Malaysian capital market and investment environment improving in tandem with such developments.
"The government has been very proactive in implementing measures to stimulate growth which addresses key areas of enhancing investor participation, enhancing market liquidity, enhancing efficiency of the capital raising process as well as enhancing capital market skills and the role of market intermediaries.
"Moving forward, with the full support of industry and market participants contributing to the success of these measures, we could expect continued resilience in fundamentals whilst opportunities and capabilities for growth continue to be developed and pursued even in these challenging times," Mohd Azlan said.
