RHB Flags 20 Potential KLCI Entrants as Technology Stocks Gain Ground in Expanded Benchmark
Octopaul AI ·
RHB Investment Bank strategist Alexander Chia identified 20 potential additions to the FBM KLCI, as Malaysia’s benchmark prepares to expand from 30 to 50 constituents. His November 4 report highlights technology stocks as a key source of new representation, while banking, energy and telecommunications could account for smaller portions of the enlarged index.
The candidate list remains indicative, with selection based on market-capitalisation rankings at the November 23 close and applicable eligibility requirements.
Potential New Entrants
Technology candidates include ViTrox Corporation, Inari Amertron, Frontken Corporation, UWC and Malaysian Pacific Industries. Sunway Construction Group and IJM Corporation could strengthen construction representation, alongside potential additions of KPJ Healthcare and IGB Real Estate Investment Trust.
The remaining candidates are Westports Holdings, Sime Darby, United Plantations, QL Resources, Dialog Group, TIME dotCom, Sime Darby Property, Malayan Cement, Top Glove Corporation, Alliance Bank Malaysia and Kelington Group.
Liquidity Remains a Key Requirement
RHB’s liquidity tests indicate that Hong Leong Financial Group, KLCCP Stapled Group, Batu Kawan and Chin Hin Group would not qualify for inclusion despite their market capitalisations. Its expected reserve list comprises Eco-Shop Marketing, Fraser & Neave Holdings, Unisem (M), Sunway Real Estate Investment Trust and Genting Malaysia. Reserve-list status does not represent immediate inclusion.
The first phase takes effect on December 21, 2026, with the transition completed at the June 2027 review. Alongside the expansion, the FBM Mid 70 will shrink to 50 constituents and become the FTSE Bursa Malaysia Mid Cap Index, while the FBM Top 100 retains 100 constituents.
Broader Representation, but a Cautious Outlook
In RHB’s illustrative 50-stock model, banking’s weighting falls to approximately 28.4% from 33.4%, while technology gains approximately 4% representation. Construction rises to approximately 3.5% from 2.6%. These are modelled figures rather than final index allocations.
Despite the broader benchmark, Chia expects Malaysian equities to remain rangebound, citing geopolitical and macroeconomic pressures, limited immediate re-rating catalysts and potential volatility following the US midterm elections. He advocates a defensive approach, selectively building positions during market weakness while remaining prepared to take profits. A sustained improvement in the broader macroeconomic backdrop would be needed to change this outlook.
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