UMW and Sapurakencana could exit in next FBM KLCI review

PETALING JAYA: Maybank Investment Bank (MaybankIB) Research opines that UMW Holdings Bhd and SapuraKencana Petroleum Bhd could be replaced by Hap Seng Consolidated Bhd and IJM Corporations Bhd respectively, in the upcoming FTSE Bursa Malaysia KLCI (FBM KLCI) constituents review in June.
Analyst Wong Chew Hann said the potential changes would result in declines albeit negligible, in the individual weights of the other existing constituent stocks on the FBM KLCI.
"As Hap Seng's market value post adjusting for its investability weight is higher than UMW, and the same with IJM vis-a-vis SapuraKencana, the other existing constituent stocks will see declines (but just negligible) in their individual weights on the FBM KLCI under both scenarios," he said in his report yesterday.
Wong noted that IJM Corp's weight on the FBM KLCI could be quite sizeable at 2.25%, largely due to its high investability weight.
The ultimate scenario, he said, will depend on share prices as at May 23 at market close.
The research house, however, made no change to its calls for the potentially affected stocks. It has UMW at "sell", SapuraKencana at "buy" and IJM at "hold", while Hap Seng was not rated.
Maybank IB said the FBM KLCI constituents are due for a review, using share prices as at market close on May 23, 2016 based on its interpretation from the FTSE Bursa Malaysia Index Series, Ground Rules.
The research firm judges that the constituent changes will be implemented after the market closes on the third Friday in June, namely June 17, and would be effective on June 20.