CEO Morning Brief

A Snapshot of Malaysia’s Big Caps Ahead of FTSE Review

edgeinvest
Publish date: Wed, 01 Jun 2022, 08:44 AM
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TheEdge CEO Morning Brief
A snapshot of Malaysia’s big caps ahead of FTSE review

KUALA LUMPUR (June 1): The local bourse — which saw trading activities surge to multi-year highs on Tuesday (May 31), just prior to the rebalancing of MSCI indices after market closed on the same day — will be seeing another semi-annual review on Thursday (June 2).

This time, it is a review of the FBM KLCI component line-up by FTSE Russell, with analysts anticipating just one change to the list of 30 companies.

According to reports, the results of the June 2 review that is based on companies' market capitalisation (market cap) data at the close of May 23, will take effect between June 17 and June 20.

According to the ground rules of the FTSE Bursa Malaysia Index Series, a security would be deleted in the review of its market cap ranking among eligible securities drops to 36th or lower, while one will make the list if its ranking rises to 25th or higher.

Two other eligibility requirements are: a minimum free float of 15%, and a certain liquidity level that differs between existing constituent and non-constituent.

The Edge looks at how the components have changed since the last review on Nov 22, 2021.

Two companies down by market cap alone

Based on the market cap of Bursa-listed companies on May 23, two KLCI constituents have come off the top-30 list, namely Inari Amerton Bhd and Top Glove Corp Bhd.

Between Nov 22 last year and May 24, Inari’s shares have fallen RM1.67 or 40.05% to RM2.50, from RM4.17. This shaved off RM6.38 billion from the semiconductor group's market cap, leaving it with RM9.27 billion.

Meanwhile, Top Glove shares fell 74 sen or 33.12% to RM1.49, from RM2.23, with its market cap falling RM6 billion to RM11.93 billion.

Replacements' market caps also shrank

In comparison, two non-constituents are now within the 30 biggest companies by market value — namely Westports Holdings Bhd and Hap Seng Consolidated Bhd.

Hap Seng has been among the top 30 largest companies since the last review, rising from the 29th place during the last review to 26th place on May 23, with a market cap of RM17.88 billion. However, it was excluded from the KLCI in 2H21, which analysts said was because it did not meet the liquidity criteria.

Interestingly, the share price of both Westports and Hap Seng declined in the period under review — albeit at a slower quantum compared with the aforementioned companies.

Hap Seng shares fell 27 sen or 3.66% to RM7.18 from RM7.45, whereas Westports shares fell 30 sen or 7.38% to RM3.80 from RM4.40, which shaved Westports' market cap to RM12.96 billion from RM14.32 billion.

Excluding Hap Seng, the KLCC Stapled Group surprises by being the next on the list, with a market cap of RM12.31 billion, little changed from RM12.17 billion previously.

One change in top 10

Since the last review, there has been no change in the ranking of the top 10 Bursa-listed companies by market cap, save for Petronas Gas Bhd.

PetGas traded its 10th spot with MISC Bhd, which was previously placed 11th, as the latter's market value rose by RM3.39 billion to RM34.19 billion, as compared with the market cap of PetGas, which climbed to RM32.61 billion from RM32.45 billion. Including PetGas, half of the former top 10 saw their market caps shrink.

Changes on reserve list?

As for the sole change to the actual top 30 constituents, analysts estimated that Inari will be taken out, after just six months on the benchmark index, and will be replaced by Westports.

Meanwhile, the list of new non-constituents among the top 40 have also changed, indicating potential updates on the FBM KLCI reserve list from the original companies.

Aside from Westports, those on the reserve list that remained in the top 40 are Malaysia Airports Holdings Bhd and QL Resources Bhd, while ViTroX Corp Bhd and Malaysia Pacific Industries Bhd have fallen off the list.

Instead, new names in the top 40 category include Batu Kawan Bhd, which had a market cap of RM10.91 billion on May 23, Gamuda Bhd (RM9.25 billion), Sunway Bhd (RM8.64 billion) and Time dotCom Bhd (RM8.08 billion).

Source: TheEdge - 1 Jun 2022

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