PETALING JAYA: Due to its descending share price, Malaysia Airport Holdings Bhd (MAHB) is at risk of exclusion in the FBM KLCI in the upcoming review on June 4.
It could be replaced by TELEKOM MALAYSIA BHD (TM), said CIMB Investment research head Ivy Ng in a report.
MAHB is down some 32% on a year-to-date basis, at its closing price of RM4.81 yesterday.
Being an airport operator, MAHB is in a sector that has seen its operations significantly impacted by the Covid-19 pandemic.
FTSE Russell, a global provider of benchmarks, data and analytics, is due to announce the results of its upcoming semi-annual review of FBM KLCI series on tomorrow.
Changes in FBM KLCI constituents, if any, will be revealed then.
Ng explained that based on share prices as at the end of trading on May 6, MAHB has fallen to the 38th position, and hence is at a higher risk of being excluded if it stays at or below the 36th position in market-cap ranking come the start of the review date of May 25.
“Should this happen, the next largest company by market capitalisation that also meets the liquidity criteria will be selected for inclusion. Our analysis revealed that TM appear to be in line to take that spot, ” said Ng.
She said since TM’s market cap is only 0.3% behind that of Genting Bhd, which is at 25th position, she would not discount the possibility that TM could rise to 25th position come May 25, and hence be eligible for inclusion.
“If this happens, then MAHB will again be at risk of exclusion, by being the lowest-ranking constituent in market cap, ” said Ng.
In her report, Ng expects the review to use market capitalisation data at the close of trading on May 25 (the data on a Monday, four weeks prior to the review effective date).
All constituent changes in the review will take effect on Monday, Jun 22.
This review is followed closely by the market as it could have an impact on FBM KLCI-linked products like FTSE 30 ETF and FBM KLCI-linked funds.
The FBM KLCI constituents account for about 61% of total market capitalisation as at May 6. The index’s ground rules stipulate a few things. Firstly, a security would be inserted in the benchmark index during the periodic review if its market cap has risen to the 25th position or above among the eligible main market securities.
Secondly, a security would be deleted at the periodic review if it has fallen to the 36th position or below among the eligible main market securities.
Apart from market capitalisation rankings, the other two criteria that companies need to meet for inclusion in the FBM KLCI are a free float of 15% and above, and it’s liquidity.
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