PETALING JAYA: Hong Leong Investment Bank (HLIB) Research has upgraded its rating on Bursa Malaysia Bhd

from “hold” to “buy”, with a higher target price of RM9.85 from RM9 previously, as it rolls forward its valuation horizon from financial year ending Dec 31, 2026 (FY26) to mid-FY27 earnings per share, pegged to a 27 times price-to-earnings ratio.

In a report to clients, it said Bursa represents a compelling trade given potential average daily value (ADV) catalysts from a possible early 16th General Election (GE16) and KLCI expansion.

“With foreign shareholding in the stock near its all-time low, we think this offers some degree of downside cushion,” HLIB Research said.

Bursa also boasts superior environmental, social and governance credentials, having recently attained the maximum score of 5 under the FTSE4Good assessment framework – becoming the first Malaysian publicly listed company to achieve this.

HLIB Research said although Malaysia’s GE16 isn’t due until early 2028, market chatter suggests it could take place sooner.

“Our base case assumes that the national Parliament will be dissolved after the tabling of Budget 2027 (on Oct 9) and for GE16 to be held by early November, before the monsoon season hits.”

The brokerage said that in three out of the four GEs (GE13-GE15), ADV was higher during the “dissolution to polling” period (+1.6% to +6.6%) and over the “30 days after polling” period (+36.5% to +70.3%) compared with the baseline of “30 days before dissolution”.

“We thus hypothesise that national polls have a near-term positive effect on ADV,” it said, adding that Bursa’s market capitlisation and share price have displayed a 74.8% correlation with ADV on a monthly basis, measured since the post-global financial crisis (GFC) period.

“Taking these results into consideration, we view Bursa as an apolitical election play – it benefits from an ADV boost but without the ‘political linkages’,” it added.

“The only exception to our analysis was during GE12 (2008), where ADV showed a sequential decline over the three analysed periods – likely, in our view, due to the onslaught of the GFC,” the brokerage said.

HLIB Research said it lowered its FY26, FY27 and FY28 earnings forecast by 1.6%, 3.3% and 3.4%, respectively.