FTSE Bursa Malaysia KLCI(FBM KLCI)- Technical Analyst You Are Warned!
The Kuala Lumpur Composite Index (KLCI) is called the FTSE Bursa Malaysia KLCI (FBM KLCI) starting on 6 July 2009 onwards. .
What a long and mouthful phases! 😀
Now the new index is that it features 30 stocks instead of the previous 100 stocks.
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A significant milestone will be reached in Malaysia on 6 July when the historic Kuala Lumpur Composite Index (KLCI) transitions to the FTSE Bursa Malaysia KLCI.
Malaysia has been active in implementing initiatives to stimulate international investment flows and the switch to a 30 stock FTSE calculated benchmark paves the way for the creation of ETFs, structured products and other derivatives to assist this.
The FBM KLCI joins other domestic benchmarks such as the STI in Singapore and FTSE MIB in Italy, which have chosen FTSE to be their index calculator.
Malaysia also recently announced that it will be merging its Second Board with the Main Board, and renaming MESDAQ to ACE, with indices reflecting these changes from 3 August.
Source: http://www.ftsefocus.com/july2009/article6.html
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There are two different methods most stock traders use to analyze a stock as a potential investment.
It is called Fundamental analysis and Technical Analysts.
Fundamental analysis is the study of news and the financial condition of a publicly traded company.
Technical analysts make decision which stock they will invest in based on criteria they see on a stock price chart.
Those who use Technical Analyst must be aware that FTSE Bursa Malaysia KLCI(FBM KLCI) now use yesterday closing price as a opening price for next day market!
Does not matter whether you get your Chart from Bloomberg, Reuters, Chart Nexus, etc, this still follow.
Therefore you will NEVER see a Gap Up or Down formation!
Technical Analyst You Are Warned!
Media Releases by Bursa Malaysia
BENCHMARK INDEX KLCI TO BE RENAMED AS FTSE BURSA MALAYSIA KLCI ON 6 JULY 2009
Bursa Malaysia today reminded the market that its benchmark index, the Kuala Lumpur Composite Index (KLCI) will adopt FTSE’s global index methodology and will be renamed as FTSE Bursa Malaysia KLCI, starting on 6 July 2009 onwards.
The FTSE Bursa Malaysia KLCI will be free-float adjusted and liquidity-screened to give investors an investable and tradable index which remains characteristic of the underlying market. Constituents of the FTSE Bursa Malaysia KLCI will be made up of Bursa Malaysia’s 30 largest eligible Main Board companies. The computation is based on investable market capitalisation.
The calculation of FTSE Bursa Malaysia KLCI will be on a 15 second basis in comparison to 60 seconds adopted by KLCI currently. This improvement in speed of index calculation will essentially benefit the investors as they will be able to closely track the pulse of the market trading activity.
The opening index value on 6 July 2009 will remain unchanged and adopt the KLCI index closing value on Friday, 3 July 2009.
For example, if the KLCI closes on Friday, 3 July 2009 at 1,000 points, the index will open on Monday, 6 July 2009 at 1,000 points.
The computation of the index will then be based on the 30 constituents.
Subsequently with the transition, the FTSE Bursa Malaysia Large 30 Index will be retired on 6 July 2009. Following from the transition, the FTSE Bursa Malaysia 100 Index will be known as the FTSE Bursa Malaysia Top 100 and its features will remain unchanged.
Financial products using the FTSE Bursa Malaysia Large 30 Index or KLCI, such as the FBM30etf, Kuala Lumpur Composite Index Futures (FKLI) and the Kuala Lumpur Composite Index Options (OKLI) will adopt the FTSE Bursa Malaysia KLCI as its underlying index with effect from 6 July 2009.
As part of the FTSE Bursa Malaysia Index Series, the FTSE Bursa Malaysia KLCI is reviewed every June and December by an independent index committee for compliance to the Ground Rules of FTSE Bursa Malaysia index series.
For more information on FTSE Bursa Malaysia KLCI, please visit
http://www.bursamalaysia.com/website/bm/market_information/fbm_klci.html or www.ftse.com/bursamalaysia.
Source:http://bursa.listedcompany.com/newsroom/FBM_KLCI_pre-conversion_media_release_FINAL.pdf
Bursa’s revamped stock index retreats on first day
By IZWAN IDRIS
PETALING JAYA: FTSE Bursa Malaysia KLCI (FBM KLCI), the revamped stock index of Bursa Malaysia, retreated on its first trading day yesterday after it replaced the old KL Composite Index (KLCI), with most investors keeping to the sidelines on a lack of clear market direction while other market players said they missed the old index.
The FBM KLCI ended its first day down 6.86 points or 0.6% to 1,065.83 points. Total market turnover was 762 million shares worth RM844mil – the lowest value in three months.
Market breath was negative, with 436 decliners and 157 advancers while 174 counters were unchanged.
The stock exchange operator yesterday replaced the 102-counter strong KLCI with the FBM KLCI – an index that tracks the performance of the 30 biggest stocks on the local bourse, and weighted based on market value and liquidity.
The current FBM KLCI’s constituents are similar to the old FBM Large 30 index, which was “retired” yesterday.
The FBM Large 30 index was part of a series of indices that included the FBM 100 index (renamed FBM Top 100 Index) developed by Bursa Malaysia and the FTSE Group.
“It’s a good move to upgrade the main index to international standard,” ASM Investment Services chief investment officer Rusli Abu Yamin told StarBiz yesterday. “But for us, we would still prefer to benchmark our funds against a bigger pool of stocks.’’
ASM manages more than RM500mil worth of assets in 17 funds.
OSK Research, in a report dated July 3, said most of it clients favoured the FBM Top 100 Index as the benchmark, as the index constituents matched the “old” KLCI in terms of sector spread.
“Some of the important sectors, like property and construction, are not that well represented in the FBM KLCI,” Rusli noted.
In the stock market action yesterday, top gainer IJM Corp Bhd added 30 sen to RM5.60.
The stock, which is a favourite among analysts for exposure to the construction sector, failed to be included in the FBM KLCI.
Bursa Malaysia said its independent index committee would review the FBM KLCI every June and December, and would seek fresh views and feedback from market players before making any changes to the index.
The exchange, in a statement dated June 24, said “financial products using the FBM Large 30 index or KLCI, such as the FBM30etf, KLCI futures and the KLCI options, will adopt FBM KLCI as its underlying index” effective yesterday.
Sources:http://biz.thestar.com.my/news/story.asp?file=/2009/7/7/business/4266673&sec=business
KLCI stocks to be reduced to 30
KLCI stocks to be reduced to 30
KUALA LUMPUR: Bursa Malaysia Bhd sees little trading disruption over its plan to trim down the KL Composite Index (KLCI) to 30 large and liquid stocks. The new primary index, called the FTSE Bursa Malaysia KLCI, will replace the existing one effective July 6.
The new market benchmark will adopt the outgoing KLCI closing value on July 3. This will ensure the KLCI price continuity since it was first introduced in 1986.
Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said based on the exchange’s consultation with the industry, most index tracking fund managers were already focused on 25 to 30 counters that made up the KLCI.
“There would probably be some portfolio realigment by fund managers, but overall we see a smooth transition in the broader market,’’ he told a press conference yesterday.
FTSE Group Asia Pacific managing director Paul Hoff said based on the index company’s experience when introducing a new index elsewhere, there “would be some selling on affected stocks,’’ as index tracker funds adjusted their portfolio but the overall impact on the stock market was “minimal.”
Datuk Yusli Mohamed Yusoff (left) talking with and FTSE Group Asia Pacific MD Paul Hoff before the press conference.
The 30 constituents of the soon-to-be introduced FTSE Bursa Malaysia KLCI will be ranked primarily on share capital free float and will be similar to the existing FTSE Bursa Malaysia Large 30 index (FBM30).
It was observed yesterday that the top three companies on the KLCI were Sime Darby Bhd, Tenaga Nasional Bhd and Malayan Banking Bhd, while the top three companies ranked by free float were Public Bank Bhd, Sime Darby and Bumiputra-Commerce Holdings Bhd.
The top 30 companies represent 64% of the total market value, compared with 74% for the existing 100-strong KLCI.
Yusli said the six-month notice would provide adequate time for market players to make the necessary changes for the transition.
The new index nature of giving higher weightage to companies with higher number of shares available for trade as compared with size alone, he added, would also encourage public-listed companies, especially the bigger ones, to focus more on their existing capital structure.
“This will be an incentive for companies to increase their share capital free float,’’ Yusli said.
Exchange-traded products currently tracking the KLCI and FBM30 will move into the FTSE Bursa Malaysia KLCI. All KLCI futures and options contracts would also be subjected to changes in line with the transition of the underlying index, Bursa Malaysia said in a statement.
Bursa Malaysia engaged FTSE Group to develop a new set of Malaysian equity indices two years ago and the first set of modern indices was launched in June 2006.
On his outlook for the market, Yusli said sentiment on the local front was bogged down mainly by external developments.
“The condition remains very challenging, very volatile and I believe this will continue for a while,’’ he said.
Bursa Malaysia derived the bulk of its income from fees collected from trading of shares on the local exchange. The weak market was expected to have a big impact on its financial performance for the year ended Dec 31. The full-year results were expected to be out early next month.
Sources:http://biz.thestar.com.my/news/story.asp?file=/2009/1/22/business/3082299&sec=business