KUALA LUMPUR (Oct 18): CIMB IB Research said Telekom Malaysia Bhd could be excluded as a constituent stock while Top Glove Corp Bhd may be added when FTSE Russell announces the outcome of its semi-annual review of the FBM KLCI constituents on Dec 6 this year.

In a strategy note Oct 17, the research house said as at Oct 16, it found Telekom Malaysia has fallen to the 37th position and no company that is not currently in the KLCI constituents has risen to the 25th position or higher to qualify for inclusion.

“If the market cap positioning remains unchanged till Nov 26, our hypothetical analysis reveals that Telekom Malaysia could be deleted from the FBM KLCI index.

“The stock that will qualify for insertion will be the highest-ranking constituent that is not in the index, which is currently Top Glove,” it said.

CIMB Research’s Ivy Ng Lee Fang said the possible changes in KLCI constituents may impact near-term share price movements of the stocks affected.

“Overall, we retain our view that the stock market could be volatile in the months ahead due to short-term domestic policy uncertainty and external risk factors.

“However, we are positive on the government’s push to reform the country in the medium-to-long term.

“We maintain our KLCI target of 1,684 points (15.7x P/E) and top three picks – Genting Bhd, Dialog Group Bhd and Westports Holdings Bhd,” she said.