This article first appeared in The Edge Financial Daily on November 7, 2019

KUALA LUMPUR: Top Glove Corp Bhd lost some ground again yesterday. The world’s largest glove maker’s share price fell 2.89% or 13 sen to RM4.37, wiping out another RM332.78 million from its market capitalisation on concerns that it might lose its FBM KLCI constituent status.

This means the stock has lost 3.32% or 15 sen in the past two days. It slipped two sen on Tuesday, trimming RM51.2 million from its market cap that day, bringing the total erased market value to RM383.97 million. The downtrend has further heightened the risk of a constituent status removal.

A quick check of the largest companies on Bursa Malaysia in terms of market cap shows that Top Glove is now in the 35th spot.

FTSE Russell is expected to announce its review of the KLCI late next month. Based on FTSE Russell’s rules, a stock would be included as a component of the KLCI if its market cap is in the 25th place or above, while one will be removed if it falls to the 36th spot and below.

Among the highest-ranking non-constituents of the index by yesterday’s market cap are: Westports Holdings Bhd (28th), KLCCP Stapled Group, comprising KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust (29th), Telekom Malaysia Bhd (30th), Fraser & Neave Holdings Bhd (32nd) and QL Resources Bhd (34th).

AllianceDBS Research Sdn Bhd analyst Quah He Wei said Top Glove is at risk of being removed from the KLCI constituent list if its share price deteriorates further. “It (Top Glove) is ranked 35th by market cap and will be automatically removed if it falls to 36th or below during the review.”

Top Glove said its net profit fell 12.7% year-on-year to RM370.56 million for the full year ended Aug 31, 2019 versus RM424.36 million a year ago, despite a 13.8% rise in revenue to RM4.8 billion from RM4.22 billion.