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KLCI constituents are likely to remain status quo post FTSE semi-annual review, says CIMB Research

TheEdge Tue, May 28, 2019 08:14am - 4 months ago

KUALA LUMPUR (May 28): CIMB IB Research has maintained its FBM KLCI target of 1,638 points for end-2019 and said based on its assessment, the KLCI constituents are likely to remain status quo post the FTSE semi-annual review on June 6.

In a strategy note May 27, the research house said the ratio of underperformers in the 1Q19 results season so far has remained high at 35.5% (4Q18: 39%).

CIMB Research said based on share prices as at the end trading on May 27, it found that none of the companies currently included as a KLCI constituent have fallen to the 36th position or below, which would require them to be removed from the KLCI.

“Also, we found none of the non-KLCI constituents have risen to the 25th or higher in market cap ranking which would qualify them for inclusion.

“We have also tested the KLCI constituents based on liquidity criteria and found that all meet the criteria. This leads us to conclude that there will likely be no changes in the upcoming KLCI review to be announced on 6 Jun 2019,” it said.

CIMB Research said KLCI has declined 5.8% year-to-date due to concerns over global growth and weak corporate earnings trend.

“We expect the market to stay volatile due to earnings risk concerns for rest of the year following the recent escalation in US-China trade tensions.

“Dialog Group Bhd, Malaysian Pacific Industries Bhd and Supermax Corp Bhd remain our top picks,” it said.

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