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Supermax, Kossan likely to be featured as KLCI constituents in next review

KUALA LUMPUR (Oct 12): Supermax Corporation Bhd and Kossan Rubber Industries Bhd will likely be featured as the FTSE Bursa Malaysia KLCI (FBM KLCI) constituents in its next review following the rise in both glove manufacturers’ market capitalisation.

Maybank Investment Bank Bhd (Maybank IB), in a note, said Supermax and Kossan were now the 20th and 24th largest stocks on the Malaysian exchange.

“The potential changes clearly reflect a new COVID-19 landscape with the glove sector expected to post above-normal demand-driven profits and gaming (casino) falling victim of the pandemic.

“If Supermax and Kossan do replace Genting Malaysia Bhd (GENM) and Genting Bhd (GENT), we estimate Supermax’s weight in the KLCI to be 3.09% and Kossan at 1.89%,” it said.

The next review of the FBM KLCI constituents is expected to be in November/December 2020, using share prices based on market close on Nov 23.

Maybank IB said the constituent change/s would be implemented after the market closes on the third Friday in December, which is on the 18th and would be effective on Monday, Dec 21, 2020.

It said the glove sector’s weight on the KLCI would rise to estimated 19.8% versus 15.2% at present, while gaming (casino) would likely exit.

This compares against mid-April 2020 where the glove sector’s weight was just about estimated 5.2%.

On gaming weight in the KLCI, GENM presented weight of 1.22%, while GENT amounted at 1.55%.

Presently, the four largest sectors on the KLCI with a combined weight of 66% are banks (28.4%), gloves (15.2%), utility (11.8%), and telco (10.6%)

“If Supermax and Kossan feature in the next constituent review, these four sectors would make up about 70% of the total weight: banks (27.7%), gloves (19.8%), utility (11.6%), Telco (10.3%),” it added.

Source: TheEdgeMarkets