KUALA LUMPUR (June 5): The latest KLCI constituent change could reduce the weight of financial services and utilities while increasing the weight of real estate, as IOI Properties Group Bhd (KL:IOIPG) replaces Sime Darby Bhd (KL:SIME) on the index, CIMB Research said.

The constituent changes will take effect on June 22, 2026, with index-rebalancing activities likely to occur on June 19, 2026.

The industrial, energy, consumer staples, consumer discretionary, and technology sectors are also expected to see increased weights on the index, said the research house in a note on Friday.

The reserve list, comprising the five largest non-constituents by market capitalisation, includes KPJ Healthcare Bhd (KL:KPJ), QL Resources Bhd (KL:QL), Sime Darby, United Plantations Bhd (KL:UTDPLT), and Westports Holdings Bhd (KL:WPRTS).

There will also be five constituent changes to the FTSE Bursa Malaysia Mid 70 Index and two changes to the FTSE Bursa Malaysia Hijrah Shariah Index.

For the FBM 70 Index, the new entrants are AirAsia X Bhd (KL:AAX), Allianz Malaysia Bhd (KL:ALLIANZ), Ranhill Utilities Bhd (KL:RANHILL), Sime Darby, and Solarvest Holdings Bhd (KL:SLVEST), replacing CTOS Digital Bhd (KL:CTOS), Genting Plantations Bhd (KL:GENP), IOI Properties, NationGate Holdings Bhd (KL:NATGATE), and Tropicana Corporation Bhd (KL:TROP).

"NationGate and CTOS Digital were relegated to the Small Cap Index, while Genting Plantations and Tropicana Corporation were not, suggesting that the removal of the latter two was likely due to liquidity criteria rather than market capitalisation," CIMB Securities said.

For the FBM Hijrah Shariah Index, Sunway Healthcare Holdings Bhd (KL:SUNMED) and Tanco Holdings Bhd (KL:TANCO) will replace Eco-Shop Marketing Bhd (KL:ECOSHOP) and Zetrix AI Bhd (KL:ZETRIX).

The market is currently awaiting the outcome of Bursa Malaysia and FTSE Russell's consultation on the proposed enhancements to the FTSE Bursa Malaysia Index Series, aimed at improving market representation and reducing sector concentration.

Key proposals include expanding the FBM KLCI to 50 constituents from 30, introducing a 10% cap on individual constituent weightings, and reducing the FBM 70 Index to 50 constituents.

If approved, the changes could take effect on either Dec 21, 2026 or June 21, 2027.

CIMB Securities highlighted several stocks with 'buy' ratings, including Telekom Malaysia Bhd (KL:TM) with a target price of RM7.39, Tenaga Nasional Bhd (KL:TENAGA) with a target price of RM15.90, and Public Bank Bhd (KL:PBBANK) with a target price of RM4.78.

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