STRATEGY: FBM100 The Clearer Choice
Many of our clients are looking to benchmark their fund performance against the FBM100 rather than the new FBM KLCI index. We think the FBM100 more closely matches the old KLCI in terms diversity, as 16 of the current 17 sectors are also represented in the FBM100, except for timber. The FBM100 is less top heavy as the top 5 sectors comprise only 70.5% of the index versus 82.8% in the FBM KLCI while the top 5 FBM100 stocks make up only 37.7% versus the FBM KLCI’s 47.5% and the KLCI’s 30.2%. There should be less risk of a sell-down on the mid- to smaller caps as 45 of the 70 stocks dropped from the KLCI will still be in the FBM100. Overall, the gainers on the new KLCI will still be the 3 new entrants, Genting Malaysia, YTL Power and Parkson while the top 6 FBM KLCI stocks, namely Bumi-Commerce, Public Bank, Sime Darby, Tenaga and IOI, will also see their weightage jump significantly. All of our Top Buys for July - Public Bank, Axiata, Genting Malaysia, Top Glove and WCT – will see an increase in weighting from the KLCI to the FBM100, with Public Bank being the top gainer.
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