KUALA LUMPUR (Oct 22): All current FBM KLCI constituents appear safe from removal, based on market capitalisation, at the index's upcoming review. But in terms of liquidity requirements, IOI Corporation Bhd (KL:IOICORP) stands out as the sole constituent that is at risk of exclusion.
As of Oct 22, none of the FBM KLCI’s 30 constituents have fallen below the bourse’s top 35 stocks by market capitalisation — the threshold for deletion from the index.
If this ranking remains unchanged in the four weeks until the cut-off date for the index’s review in December, no changes will be made to the KLCI composition based on market capitalisation.
However, MBSB Research flagged that IOI Corp may fail to meet the KLCI’s liquidity requirement — a monthly median daily trading volume of at least 0.04% of its shares in issue, adjusted for investability, in at least eight of the past 12 months.
The palm oil producer had already fallen short in June to August and risks removal if it fails the test again in November, the research house said.
MBSB Research identified Westports Holdings Bhd (KL:WPRTS) as the front-runner among the index's reserve list to take IOI Corp’s spot in the event it is expelled.
Other members of the current reserve list include Genting Bhd (KL:GENTING), IOI Properties Group Bhd (KL:IOIPG), KPJ Healthcare Bhd (KL:KPJ), and United Plantations Bhd (KL:UTDPLT). The reserve list is used if one or more constituents are removed from the KLCI before the next scheduled review is up.
On potential shifts to the reserve list in the upcoming review, IOI Properties could be replaced by Genting Malaysia Bhd (KL:GENM), MBSB Research noted.
Looking at the KLCI’s free float requirement, all 30 constituents currently have at least 15% of their shares held by public investors.