MSCI reduces weightage on Malaysian stocks

Move leads to FBM KLCI’s lowest close since February

KUALA LUMPUR: FBM KLCI, alongside almost all of its regional peers, closed to its lowest since February after US index provider MSCI reduced its weightage on some Malaysia’s stocks in its Malaysia Index.

This triggered selling pressure on Malayan Banking Bhd (Maybank), CIMB Group Holdings Bhd, Sime Darby Bhd, Petronas Chemicals Group Bhd (Petchem) and UMW Holdings Bhd.

The MSCI, which is designed to measure the performance of the large and mid cap segments of the Malaysian market, will take effect after market close on May 31, as part of its May 2016 semi-annual review.

It was learnt that MSCI reduced the weightage for Malaysian stocks to 3.09% from 3.43% from May 31.

The weightage would be increased for IHH Healthcare and Public Bank but reduced for CIMB, Maybank, AmBank, Sime Darby, Petronas Chemicals and Petronas Dagangan.

Maybank lost 33 sen or 3.74% to RM8.49, Sime shed 31 sen or 4.08% to RM7.28, CIMB fell 27 sen or 5.78% to RM4.40 and UMW was down 23 sen to RM6.03.

Losses in 21 counters brought down the FBM KLCI index, while seven stocks were up and the remaining two were unchanged.

Bursa Malaysia saw 1.83 billion shares changing hands totalling RM2.81bil with 607 decliners and 272 gainers.

Although MSCI weightage rebalancing was probably the main factor of the bearish market it could also be influenced by the local economy that was reported growing at slower pace of 4.2% in the first quarter of this year against a growth of 5.7% a year ago.

Most Asean countries’ weighting fell with the exception of Philippines. As Malaysia’s weightage was reduced the most, the stock market fell the most among the Asean peers, analysts said.

Regionally, Japan’s Nikkei 225 lost 1.41%, Hong Kong’s Hang Seng dropped by 0.99%, China’s Shanghai Stock Exchange Composite Index fell by 0.31%, while Shenzhen Composite Index lost 0.38%, South Korea’s Kospi Index ceded 0.53%, and Australia’s S&P/ASX200 fell by 0.57%.

Neighbouring Singapore’s Straits Times Index, meanwhile, fell by 0.38%.