The indices in the new FTSE Bursa Malaysia Index Series are:
Bursa Malaysia Berhad (Bursa Malaysia), in collaboration with FTSE Group (FTSE), announced today that they intend to launch phase 1 of the new FTSE Bursa Malaysia Index Series in June 2006. The series comprises six new indices covering all of the Malaysian market which are to be used as the basis for the creation of investment products such as Exchange Traded Funds (ETFs), derivatives and over the counter (OTC) products.
The indices in the new FTSE Bursa Malaysia Index Series are:
| No. | New Indices | |
| Benchmark Indices | ||
| 1. | FTSE Bursa Malaysia EMAS Index | comprising the constituents of the FTSE Bursa Malaysia 100 Index and FTSE Bursa Malaysia Small Cap Index |
| 2. | FTSE Bursa Malaysia Small Cap Index | comprising the 101st company to the 200th company on the Bursa Malaysia Main Board |
| 3. | FTSE Bursa Malaysia Fledgling Index | comprising the remaining 2% of the Bursa Malaysia Main Board universe with no liquidity screening |
| Tradable Indices | ||
| 4. | FTSE |
comprising the top 100 large and mid cap companies on the Bursa Malaysia Main Board by market capitalization |
| 5. | FTSE Bursa Malaysia Large 30 Index | comprising the 30 largest companies in the FTSE Bursa Malaysia 100 Index by full market capitalization; the total market capitalization of these 30 companies is approximately 70% of the total market capitalization of the FTSE Bursa Malaysia 100 Index |
| 6. | FTSE Bursa Malaysia Mid 70 Index: | comprising the next 70 companies in the FTSE Bursa Malaysia 100 Index |
Bursa Malaysia Berhad’s Chief Executive Officer, Yusli Mohamed Yusoff said, “These new indices use FTSE’s recognized international methodologies and enable investors to better benchmark our exchange with other global markets. Furthermore, the addition of tradable indices will also spur the development of new products that will result in wider investment choices for investors.”
FTSE Asia Pacific Managing Director, Paul Hoff said, “FTSE is very pleased to have been chosen by Bursa Malaysia to work on this important project for the Malaysian market. Bursa Malaysia is adopting the same FTSE methodology that is used by stock exchanges around the world including LSE, Nasdaq, and JSE. This underlines FTSE’s credentials as the leading index provider for international partnerships.”
In designing the index series for phase 1, the Index Universe will consist only of Bursa Malaysia Main Board companies. These Main Board companies are then filtered by market capitalization such that the FTSE Bursa Malaysia EMAS Index will represent about 98% of the full market capital value of all the Main Board companies. The 98% are free float adjusted and tested for liquidity before being weighted on to the various indices. The remaining 2% of the companies on the Main Board are free float adjusted and go on to be part of the FTSE Bursa Malaysia Fledgling Index.
Free float is defined as the share capital of a company that is freely available for trading by international investors. In determining the free float of a company, “strategic shareholdings” are considered restricted shareholdings, which include the following:-
- Trade investments including cross-holdings;
- Holdings by directors and founding families;
- Restricted holdings by employees;
- Government stakes; and
- Holdings that are subject to lock-in clauses.
The applicable liquidity test stipulates that the free float adjusted total issued shares traded must be more than 10% annually.
The FTSE Bursa Malaysia EMAS Index will replace the current EMAS Index with effect from the former’s launch. However, the existing Kuala Lumpur Composite Index (KLCI) will be maintained and run concurrently with the FTSE Bursa Malaysia index series.
