KUALA LUMPUR (May 17): Astro Malaysia Holdings Bhd and AMMB Holdings Bhd are at risk of being removed from the 30 constituent stocks of the FBM Kuala Lumpur Composite Index (KLCI), ahead of an upcoming review in June, according to Affin-Hwang Investment Bank Bhd (Affin-Hwang IB). 

“Astro and AMMB could potentially face some near-term selling pressure, ahead of the review of the KLCI constituents in June, as investors reposition their weightings on these stocks,” said Affin-Hwang IB analyst Kevin Low in a strategy note today. 

In its latest analysis, Affin-Hwang IB said it had flagged Astro and AMMB, as they are on the verge of breaching one of the three requirements to remain in the KLCI, a heavyweight index and barometer of the market’s performance. 

A stock is added to the KLCI list when its market capitalisation rises to 25th position or above, and removed if its market capitalisation falls to 36th position and below.
 
Based on May 16 closing prices, Affin-Hwang IB said its analysis revealed both Astro and AMMB to have fallen beyond the 36th position, as they are ranked 39th and 43rd respectively. 

“However, we note that Astro and AMMB’s stock prices have underperformed the KLCI by 35.8% and 20.6% respectively over the past three months, likely pricing-in some of this risk,” Affin-Hwang IB added. 

Sitting at the borderline 36th position, Affin-Hwang said YTL Corp Bhd is also at risk of exclusion from the KLCI, when the next review is done later this month or June. 

On the flip side, Affin-Hwang IB note said its analysis revealed three new stocks — Hartalega Holdings Bhd, Dialog Group Bhd and Malaysia Airports Holdings Bhd — could be possible inclusions.   

Going forward, it is targeting the KLCI to hit 1,923 points by year-end, owing to likely better governance from the newly-formed Pakatan Harapan government and potentially improved consumer demand. 

At 5pm, the KLCI closed 0.21% or 3.82 points lower to the 1,854.44 level. 

The KLCI, a capitalisation-weighted stock market index, was first introduced in April 1986. 

Along with other index series on the local bourse, the KLCI is reviewed on a semi-annual basis by FTSE Russell, a global provider of benchmark indices.