Return of “old darlings” on FBM KLCI

KUALA LUMPUR: The proposed expansion of the FTSE Bursa Malaysia KLCI to 50 from 30 constituents is likely to bring back former market favourites while lifting activity across property, glove and technology counters, according to Rakuten Trade Sdn Bhd.

Head of research Kenny Yee said the window for investors to position ahead of index-driven rebalancing flows is open but narrowing.

He added that should the expansion proceed, the most immediate impact would be a wave of compelled buying by index-tracking funds obliged to hold the new constituents.

Yee said the most likely returnees to the benchmark are stocks that were once synonymous with index-linked investing but have since dropped out of the 30-stock index. This includes old market darlings such as Westport Holdings Bhd, Dialogue Group Bhd and Genting Malaysia Bhd.

“These are names that passive funds and ETFs tracking the expanded index would need to accumulate, and that creates a window for investors who get there first,” Yee said.

Beyond individual stock picks, he said the financials sector presently accounts for about 35 per cent of the FBM KLCI, with most other sectors representing just 3.0 per cent to 11 per cent of the benchmark.

Yee said the expansion would help create a more balanced composition and better reflect the diversity of Malaysia’s economy today.

“Although the dilutive impact on banking stocks will not be excessive initially, we believe this is the start of a more comprehensive and structurally sound index,” Yee said.

Yee said it would be encouraging to see the introduction of stronger technology representation within the benchmark, potentially led by ViTrox Corp Bhd, Malaysian Pacific Industries Bhd and Inari Amertron Bhd.

“Malaysia’s semiconductor ecosystem has earned its place in the headline index,” Yee said.

He said Rakuten Trade views the proposal as part of a broader regional shift towards more inclusive and representative benchmarks.

The firm advised investors to closely track the final consultation outcome from Bursa Malaysia Bhd and FTSE Russell.

Subject to approval, any changes would take effect on 21 Dec 2026 or 21 June 2027, triggering one-time rebalancing flows from index-tracking funds that could benefit early movers in the likely inclusion of candidates.

© New Straits Times Press (M) Bhd

المصدر: New Straits Times