KUALA LUMPUR (March 27): Bursa Malaysia Bhd (KL:BURSA) and Hong Kong Exchanges and Clearing Ltd (HKEX) on Friday unveiled their first co-branded index — the HKEX Bursa Malaysia Large Cap Index — in a move to deepen investor access and lay the foundation for cross-border investment products between the two markets.
The index, launched in Hong Kong, tracks 60 large-cap companies — 30 each from both exchanges — offering a single investable benchmark reflecting the scale, liquidity and sector diversity of Malaysia and Hong Kong markets.
Bursa Malaysia chief executive officer Datuk Fad’l Mohamed said the initiative marks an early milestone under a broader collaboration to internationalise markets and strengthen Malaysia’s connectivity with Hong Kong and mainland China capital.
“This collaboration with HKEX aligns well with our efforts to position Bursa Malaysia as part of the global investment landscape, expanding options for public listed companies and investors while strengthening Malaysia’s connectivity,” he said.
He added that the partnership aims to enable Malaysian companies and investors to tap into deeper liquidity pools in Hong Kong and mainland China, including through southbound investment flows, while broadening access to international capital.
“For Malaysian constituents, the index serves as an excellent starting point for companies to gain greater visibility amongst Hong Kong and mainland China investors… paving the way for valuation discovery and new channels for long-term capital inflows,” he said.
In conjunction with the index launch, both exchanges also signed a memorandum of understanding (MOU) to cooperate across five strategic areas, namely streamlined pathways for dual listings between Hong Kong and Malaysia, co-development of market-driven indices, enhanced access and promotion of exchange-traded funds (ETFs), facilitation of shariah-compliant securities, and collaboration in carbon markets.
HKEX chief executive officer Bonnie Y Chan said the collaboration comes amid rising global demand for diversified exposure to Asian growth, driven by geopolitical volatility and shifting capital flows.
“Global capital is increasingly seeking diversification in the growth stories of Asia… and the markets of Hong Kong and Malaysia have the structural strengths to attract this capital,” she said.
She added that stronger pan-Asia collaboration is needed to support smoother capital flows and unlock greater liquidity potential across the region.
“By connecting market opportunities, we are building an Asian liquidity pool that will prove more attractive to global capital,” she said.
The partnership would deepen connectivity between the two markets and create new opportunities for issuers and investors, she added, including through programmes such as ETF Connect that facilitate southbound access from mainland China.
HKEX Bursa Malaysia Large Cap Index
The index tracks 60 leading companies, 30 each from Hong Kong and Malaysia, that are selected based on liquidity, listing history and market capitalisation. Hong Kong constituents are limited to eligible "Southbound" stocks — stocks that investors from Mainland China are officially allowed to buy.
It uses a free-float market capitalisation-weighted model, with a fixed geographic split: 62% weighting on Hong Kong stocks and 38% on Malaysian stocks. The index is reviewed semi-annually, with quarterly rebalancing, to maintain eligibility.
Based on back-tested or simulated data, the index recorded a one-year return of 23.5% and a dividend yield of 3.5%.
Bursa previously launched the CNI-Bursa Malaysia 50 Index with the Shenzhen Stock Exchange in 2020, which Fad’l said was more focused on profiling, to raise awareness of the companies involved. The new HKEX partnership, however, places stronger emphasis on product development and capital access.
“We feel that with the Southbound Connect opportunity, this is something that we can scale up… with a clear objective of coming up with products to help our investors access other markets,” he said, adding that the collaboration offers a “win-win opportunity” for both markets.
Shares in Bursa Malaysia closed down one sen or 0.1% to RM8.70 on Friday, valuing the group at RM7.04 billion. Over the past one year, the stock has gained 7.1%.