“There probably would not be a big difference to [fund] flows immediately — apart from a one-time adjustment on the hypothetical inclusion of the 20 new stocks — because the market cap dramatically falls off for the new inclusions,” he adds, referring to the difference between the incremental market capitalisation increase from the new 20 inclusions and the relative size of the existing 30 stocks.
Malaysia could benefit from the proposed addition of 20 companies to its 30-member flagship stock market benchmark if the enhancement of sectoral diversification on the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) attracts fresh capital inflows, experts say.
“It is good to have a larger pool of representative sectors,” UOB Kay Hian Research director of strategy Vincent Khoo says. He is supportive of greater inclusivity, but notes that greater benefits would likely show over time from new product-linked or benchmark-aware fund flows.
