News | Glove makers could fall off reserves list in upcoming FBM KLCI review

KUALA LUMPUR (Nov 4): The component stocks of the FBM KLCI will soon be up for its semi-annual review by FTSE Russell, following the last one done in June, and the current constituents are unlikely to change given that they have maintained their position as the top 30 counters on Bursa Malaysia by market capitalisation.

The changes could instead be to the list of reserve stocks, which comprises the five highest-ranking non-KLCI constituents. The five currently on the list are Westports Holdings Bhd, QL Resources Bhd, Supermax Corp Bhd, Kossan Rubber Industries Bhd and Inari Amertron Bhd.

In particular, the two glove makers on this reserves list have seen their market capitalisations decline substantially since the last review.

Supermax’s market capitalisation, which stood at RM10.5 billion on June 3, has now halved to RM5.14 billion, while Kossan’s market cap declined 35.8% from RM9.72 billion to RM6.24 billion.

Both their share prices have been trending downwards since April this year against the background of lower average selling prices (ASPs) and the normalisation of glove makers’ profits after the pandemic-driven supernormal cycle.

On top of that, Supermax’s products have been slapped with an import ban in the US amid allegations of forced labour, which does not help sentiments on the counter.

Supermax shares, which closed at RM4.01 on June 3, settled at RM1.89 on Wednesday, while Kossan’s shares have dropped from RM3.81 to RM2.44.

Based on the latest market caps of companies on the local stock exchange, the new reserve list could see the entry of KLCCP Stapled Group and Malaysia Airport Holdings Bhd.

Meanwhile, according to FTSE Russell’s rules, a stock would be added as a component of the index if its market capitalisation rises to the 25th place and above. On the other hand, constituents will be removed if their market cap falls to the 36th place and below.

During the last review of the index in June, Mr DIY Group (M) Bhd was included into the benchmark index, while Supermax was removed.

Instead, Supermax, together with four others were included into the FBM Mid 70 Index. The four others were: D&O Green Technologies Bhd, Greatech Technology Bhd, Hong Leong Industries Bhd and UMW Holdings Bhd.

The five additions were to replace Datasonic Group Bhd, Ekovest Bhd, IOI Properties Group Bhd, KLCC Stapled Group Bhd and Mr DIY, which were removed from the FBM Mid 70 Index. – The Edge

by Ahmad Naqib Idris

credit photo: FinancialTimes

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