KUALA LUMPUR (Nov 4): Hartalega Holdings Bhd and Top Glove Corp Bhd could be replaced by AMMB Holdings Bhd and QL Resources Bhd in the upcoming KLCI constituents review for December, according to CGS-CIMB Securities.

In a note on Thursday (Nov 3), the research house said that based on Refinitiv market data as at the close of trading on Nov 1, Hartalega is ranked 39th in market capitalisation while Top Glove is ranked 42nd.

“We think AMMB and QL Resources, which are ranked 28th and 29th in market capitalisation, could gain entry into the KLCI index in the upcoming review, replacing Hartalega and Top Glove,” analysts Ivy Ng Lee Fang and Nagulan Ravi.

They said that Hap Seng Consolidated Bhd, which is ranked a higher 26th in market capitalisation, may not qualify as their calculations suggest that it has not met the liquidity test.

“We estimate that AMMB’s and QL Resources’s potential KLCI weightage will be 1.9% and 1.2%, respectively, against Top Glove’s current 1.0% and Hartalega’s 0.8%.

“AMMB and QL Resources could gain investor interest due to their potential inclusions,” they said.

CGS-CIMB has "add" calls on both the stocks.

“There could be short-term selling pressure on Top Glove and Hartalega (we have 'reduce' calls on both) if they are excluded from the KLCI.

“This would also mean glove players will not be represented in the KLCI, while the bank and consumer sectors will see higher weightage in the KLCI,” said Ng and Ravi.

FTSE Russell will be using data at the close of trading on Nov 21 for the review and announce the changes to the market on Dec 1.