The Kuala Lumpur Composite Index (KLCI) for 30 stocks is the market capitalization weighted benchmark stock market index for Malaysia that was introduced on 4th April 1986 with a base value of 100 set on 1st January 1977.
In 2006, Bursa Malaysia partnered with FTSE to provide a suite of indices for the Malaysian market, to enhance the KLCI. FTSE Bursa Malaysia KLCI was one of the indices created to replace the KLCI. The new index was adopted on 6 July 2009, with the opening value taken from the closing value of the old KLCI on 3 July 2009. The enhancement adopts the internationally recognized index calculation formula to increase transparency and tradability.
The KLCI represents the top 30 companies by market capitalization on the Bursa Malaysia Main Market that pass the relevant investibility screens. The index is designed for the creation of index tracking funds, derivatives and as a performance benchmark.
The index is calculated using the Weighted Average Market Capitalization methodology where the price multiplied by the free float gives the market capitalization of its constituents. The base value of the index is 100 on 1st January 1977. The weightage of each company is arrived at by dividing the market capitalization of each company with the total market capitalization of all the 30 companies. The larger the market weightage of the company the larger is the impact due to 1% change in its price on the index.
The index composition is reviewed semi-annually in the month of June and December. The minimum requirement for free float of a stock is 15% of total shares with a minimum 10% annual turnover of free float shares for inclusion in the index.
Banks constitute 32.92% followed by Telecommunications at 16.23%, Food and Beverage at 9.22%, Utilities at 8.88%, Oil and Gas at 8.19%, Industrial Goods and Services at 7.42%, Tourism at 6.42%, Chemicals at 3.7%, Healthcare at 2.15%, Personal and Household Goods at 1.71%, Automobiles and Parts at 1.36%, Media at 1.01%, and Real Estate at 0.8% for the sector allocation in the index. Index constituents are categorised in accordance with the Industry Classification Benchmark (ICB), the global standard for industry sector analysis.
The KLCI has given a return of 5.9% on a year on year basis and has gained 2.1% on a three month basis. The index reached an all-time high of 1887 in May 2014. The index has a Price to Earnings ratio of 22.89 in the current scenario. Public Bank BHD has the highest weightage of 11.64% in the index followed by Malaysian Banking with a weightage of 8.11%, CIMB Group Holding with 7.38%, Tenega Nasional with 7.21%, Axiata Group Bhd at 6.59% and Sime Darby at 5.68% while others have less than 5% weightage each in the index.
Top Ten Constituents for KLCI
