Malaysian Market Strategy - Radical change to the KLCI

Malaysian Market Strategy - Radical change to the KLCI structure


* The KLCI index, followed by most domestic fund managers, will be
reduced from 100 stocks to 30 stocks on 6 July.

* US$83 bn worth of domestic funds are benchmarked to the KLCI, thus
changes in weightings and components could impact stock prices.

* We know most of the index components, but it will be 'reviewed' on
11 June, which could result in some changes, due to recent significant
changes in market capitalisations.

* Clear beneficiaries: BCHB, Public Bank, Resorts World, YTL Power
and Parkson, assuming no changes.

* Losers: Property, construction, hotel and tech stocks will not be
featured in the new index.

* Following the 11 June revision, possible new joiners are IJM,
Gamuda and SP Setia, which have high free floats.

* Potential drop-outs following the 11 June revision could include
borderline FBM30 components, such as MAS, RHB Capital and Petronas
Dagangan.