FBM KLCI Expansion To Better Reflect Malaysia’s Economy, Stock Weighting Impact Manageable -- AHAM Capital
By Zufazlin Baharuddin
KUALA LUMPUR, Oct 14 (Bernama) -- The expansion of the FTSE Bursa Malaysia KLCI (FBM KLCI) from 30 to 50 constituents is expected to provide a more accurate representation of Malaysia’s domestic economy.
The impact on the weightings of existing constituents is expected to be manageable, according to AHAM Asset Management Bhd (AHAM Capital).
Its deputy head of equity (Malaysia), David Loh, said the expansion would provide broader coverage of the domestic market, which has long been represented by a relatively small number of companies, while allowing the performance of more sectors, particularly technology, to be reflected in the benchmark index.
“For the longest time, the biggest comment about the Malaysian index is that it is very much in the old economy sector. A lot of technology stocks have done well in the past, but their performance was not captured in the FBM KLCI because they were not in there.
“With these technology stocks coming in, that will help the new index going forward,” he told Bernama on the sidelines of a media engagement and networking session with AHAM Capital fund managers here today.
The implementation will take place from Dec 21, 2026, with Phase 1 seeing 20 new constituents added to the FBM KLCI at 50 per cent of their final index weight.
In Phase 2, the 20 new constituents will reach 100 per cent of their final index weight, completing the transition to the enhanced FBM KLCI effective June 21, 2027.
Loh said the phased implementation was intended to minimise market disruption as the inclusion of 20 new constituents would dilute the weightings of the existing 30 constituents.
“Based on the early calculation by the index strategist, the impact on their weightings should not be more than a high single digit,” he said.
He added that the transition was designed to minimise disruption and that the overall impact was expected to be manageable.
Following the expansion of the FBM KLCI, the FBM 70 will be reduced from 70 to 50 constituents and renamed the FTSE Bursa Malaysia Mid Cap Index.
The FTSE Bursa Malaysia Top 100 Index will remain unchanged at 100 constituents.
-- BERNAMA