KUALA LUMPUR (May 13): A selldown of stocks being expelled from the MSCI Malaysia Index has wiped out over RM2 billion in market capitalisation as investors adjusted their portfolios.
YTL Corp Bhd (KL:YTL) fell nearly 4%, the most among the six stocks slated for removal from the index, followed by QL Resources Bhd (KL:QL) that declined 3% while Mr DIY Group (M) Bhd (KL:MRDIY) and Axiata Group Bhd (KL:AXIATA) each lost over 2%.
Nestlé (Malaysia) Bhd (KL:NESTLE) edged down 0.10% to RM99.64.
PETRONAS Dagangan Bhd (KL:PETDAG), also pencilled in for removal from the index, was up 3.8%. Excluding the gain, the other five stocks lost a collective RM2.35 billion in market value.
The removal of the six counters was expected, Berjaya Research Sdn Bhd head of research Kenneth Leong told The Edge, due to their share price underperformance amid global market volatility linked to the conflict in the Middle East.
“There could be some selling pressure over the move,” he noted.
The indices are closely watched by fund managers and international investors. An exclusion from the indices can trigger outflows as investors sell the former constituent in their portfolios to mirror the benchmarks.
MSCI indices are rebalanced every three months on the final trading day of the quarter. MSCI will add or remove stocks based on specific criteria, such as size and liquidity, to ensure the indices stay relevant as benchmarks of the markets they represent.
All changes to the MSCI indices will be effective at the close of May 29, the index provider said. The next review has been scheduled for Aug 12.