KUALA LUMPUR (Jan 12): Bursa Malaysia has launched an equity index based on financial performance and its Islamic counterpart that will showcase firms with strong fundamentals.

Unlike headline benchmarks that mainly track companies based on market capitalisation, Bursa Malaysia Quality 50 Index (BMQ) and the Bursa Malaysia Quality 50 Shariah Index (BMQ-S) assess companies on profitability, capital structure and earnings quality.

“These factors are measured through return on equity, debt-to-equity, and operating cash flow relative to profit after tax and minority interests,” the exchange operator said in a statement.

Each index comprises 50 companies from the Main and ACE Markets that are not part of the main bellwether KLCI.

Other requirements for the indices are that companies must have a market capitalisation of at least RM300 million and a trade velocity — liquidity metric — of at least 10% over a 12-month period.

The composition of the indices will be reviewed twice a year.

The indices provide reference points that reflect the broader landscape, ensuring that Malaysian companies with strong fundamentals are visible and accessible to investors, while supporting participation in the market, said Bursa Malaysia CEO Datuk Fad’l Mohamed.

“We are seeing financially resilient companies emerging across sectors,” including technology companies which make up almost 18% of both BMQ and BMQ-S, he added.