Hap Seng Consolidated likely to be excluded from FBM index series, says Kenanga Research

The research firm said Inari was currently the largest non-FBM KLCI member by market capitalisation with the requisite free float and liquidity and if admitted, it would be the sole technology component in the index. — Bernama pic
The research firm said Inari was currently the largest non-FBM KLCI member by market capitalisation with the requisite free float and liquidity and if admitted, it would be the sole technology component in the index. — Bernama pic

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KUALA LUMPUR, Nov 23 — Kenanga Research expects Hap Seng Consolidated Bhd to be removed from the FBM Index series on the grounds of falling below the required liquidity threshold and will most likely be replaced in the FBM KLCI by Inari Amertron Bhd.

The research firm said Inari was currently the largest non-FBM KLCI member by market capitalisation with the requisite free float and liquidity and if admitted, it would be the sole technology component in the index.

“Based on Inari’s represented index shares of 2,275.58 million at the current price of RM4.24 versus Hap Seng’s 649.52 million at RM7.70, we estimate that Inari would come in at around 1.97 per cent weight versus Hap Seng exiting at 1.03 per cent weight.

“The final figures will, however, be based on closing prices on Friday, Dec 17, after which the new list will be first reflected at the start of trading on Monday, Dec 20,” Kenanga Research said in a note today.

Monday (November 22) was the cut-off date for the FTSE Russell Malaysia’s final semi-annual review of 2021. Data as at yesterday’s close will determine the updated constituents of the FBM Index series that will be published on Dec 2, and to be implemented effective Dec 20.

At the closing prices as at yesterday’s cut-off date, Kenanga Research said Hap Seng was ranked 25th by market cap but likely to be disqualified on grounds of insufficient liquidity.

It noted that the ground rules state that to remain in the FBM Index series, a member stock must turn over at least 0.04 per cent of its free-floating shares in issue, based on its median monthly trading volume for at least eight of the 12 months prior to the semi-annual review.

“For Hap Seng, trading liquidity fell below the required threshold towards the end of review period for five straight months. The median turnover exceeded 0.04 per cent only for six of the last 12 months. As such, it appears to us that Hap Seng has failed to satisfy the minimum liquidity threshold,” the brokerage said. — Bernama

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