KUALA LUMPUR: Kenanga Investment Bank Bhd expects a boost in its equity broking (EB) business this year on the back of positive changes in the industry.
Group managing director Datuk Chay Wai Leong said this will come from two fronts in the EB business.
“The recent announcement of stamp duty waiver on small-cap, mid-cap stocks and structured warrants, as well as the liberalisation of margin financing rules are expected to boost our EB business margin and trading income,” Chay said in Kenanga IB’s recently-published 2017 annual report.
“The anticipated growth in these two businesses will help offset some of the increase in cost arising from its technological investments that aims to further enhance client experience and further solidify its position in the marketplace. This, coupled with EB’s strong presence in the retail sector as well as, the derivatives market will serve to propel EB to new heights in the coming year,” he added.
Chay, however, expects the situation to remain challenging for the Kenanga Futures Sdn Bhd (KF).
“The challenging market conditions faced by KF are expected to persist in 2018. However, on-going geo-political tensions in the global landscape and recovery in commodity prices may attract interest back into the market.”
As such, KF will step up efforts to increase its domestic client base to reduce its reliance on foreign institutional clients, he added.
He said KF will be expanding its product offerings by providing access for its clients to access the U.S. CME Group markets this year.
At the same time, KF will profile KDF TradeActive more aggressively as it allows clients to trade on both markets in one single platform on both desktop and mobile devices on-the-go.
Kenanga IB yesterday announced that it had begun talks to acquire the stockbroking business of Inter-Pacific Securities Sdn Bhd.
Chay hoped the deal , which will create one of the largest stockbrokers in the country, would be finalised in the next six months.
“The potential acquisition would further strengthen Kenanga IB’s leading position in the retail broking space to become the top-two largest stockbrokers in Malaysia, with a combined market share of over 10 per cent and retail market share of about 25 per cent,” he said in a statement.
No details on the value of the deal were made available in the announcement on Tuesday.
Kenanga IB posted a pre-tax profit of RM23.6 million and revenue of RM182 million in the first quarter ended March 31, 2018.
Its stockbroking business posted a pre-tax profit of RM11.8 million, while its investment banking activities contributed RM2.7 million.