SAKP to be replaced by IJM?
Potential changes
SAKP may be replaced by IJM Corp in the upcoming FBM KLCI constituents review for December. This would result in slight declines in the individual weights of the other existing FBM KLCI constituent stocks. Then again, this is quite a similar situation as per the last FBM KLCI constituents review in June but SAKP stayed as a constituent stock then. There is no change to our stock calls - SAKP remains a BUY, IJM a HOLD.
Based on 21 Nov’s close
The FTSE Bursa Malaysia KLCI (FBM KLCI) constituents are due for a review, using share prices as at market close last Monday (21 Nov), as per our interpretation from the FTSE Bursa Malaysia Index Series, Ground Rules (updated Aug 2016). The constituent changes will be implemented after the market closes on the third Friday in December, namely 16 Dec,
and would be effective Monday, 19 Dec.
Based on our estimates
Using share prices as at 21 Nov’s market close, SAKP, which ranked 38th in market capitalisation, could exit as a constituent stock. IJM Corp, which ranked 31st by market capitalisation, could feature. Nestle, which ranked 23rd may not qualify as it may not meet the liquidity test. This is quite a similar situation as per the last FBM KLCI constituents review in June (see our note on 11 May 2016). Back then, SAKP has remained a FBM KLCI constituent stock post the June review.
FBM KLCI constituent weights, based on 24 Nov 2016’s closing share prices (ranked by existing weightage):
Impact on weightings
As IJM Corp’s market value post adjusting for its investability weight is higher than SAKP, the other existing 29 constituent stocks will see small declines in their individual weights on the FBM KLCI. We estimate IJM Corp’s weight on the FBM KLCI to be 2.13% versus SAKP’s 1.32% presently.
source: Maybank Investment Bank Research – 25/11/16
