Malaysia is one of the most promising emerging economies in Southeast Asia. It is also one of the most prosperous and industrialized countries in the region. For those interested in investing in Malaysia, we analyze its most important stock market indices.
Content
- Introduction
- FTSE Bursa Malaysia KLCI
- FSTE Bursa Malaysia Mid 70
- FTSE Bursa Malaysia Top 100
- MSCI Malaysia
Introduction
Malaysia is a nation with about 33 million inhabitants and very young demographics. This means that the country´s population increases every year, unlike in other countries in Southeast Asia. Hence, its prospects for long-term economic growth are excellent.
At the same time, it is a more prosperous and developed country than other economies in the region, such as Thailand or Indonesia. Thanks to that, its people enjoy a better standard of living.
The Malaysian economy is highly industrialized, with a powerful manufacturing sector, and has abundant oil reserves. The most important energy company in the country, Petronas, gives name to the most important skyscrapers in Malaysia. We are referring to the Petronas Towers.
The capital of the country is Kuala Lumpur, a global metropolis where Malaysia’s main stock exchange is located. The stock exchange is called Bursa Malaysia, although it is also known by its former name of Kuala Lumpur Stock Exchange, or simply KLSE.
The Malaysian currency is the ringgit, whose international code is MYR. It is a relatively stable currency, thanks to the solid management of the country´s public finances and monetary policy.
For those interested in investing in Malaysia passively through an ETF, we analyze its most important stock market indices.
FTSE Bursa Malaysia KLCI
The FTSE Bursa Malaysia KLCI is the main stock market index in Malaysia. It has been around since 1986, although its name has changed over the years.
This index is produced in partnership between the company FTSE Russell, which calculates stock market indices for countries and regions around the world, and the Malaysian Stock Exchange. This collaboration started in 2006 and facilitates the calculation and dissemination of indices of various types.
In the case of the FTSE Bursa Malaysia KLCI, it includes the 30 largest listed companies in the country. Hence, this index is a great alternative to ensure stocks have a good level of liquidity.
Within the index stocks are weighted based on their market capitalization adjusted for free float. And it is important to note that the index is updated regularly throughout the year.
For those looking to learn more about the FTSE Bursa Malaysia KLCI, here is the link to the Malaysian Stock Exchange website.
FTSE Bursa Malaysia Mid 70
FTSE Russell and the Malaysian Stock Exchange also calculate the FTSE Malaysia Mid 70, which includes the next 70 largest companies in the country. In it we find the largest Malaysian corporations that fail to make it into the FTSE Bursa Malaysia KLCI.
For this reason, these stocks are considered mid-cap. Although they enjoy less liquidity, we can also expect cheaper valuations, since many large investors are not able to properly invest in them.
If you want to see which companies are part of this index, you can visit the following link.
FTSE Bursa Malaysia Top 100
If we consolidate the 30 companies in the FTSE Bursa Malaysia KLCI and the 70 companies in the FTSE Bursa Malaysia Mid 70, we end up with the 100 largest companies in the country. This is precisely what the FTSE Bursa Malaysia Top 100 does.
Thus, this index bundles all these companies together, so that investors can analyze what happens to large and medium-sized Malaysian companies at the same time.
It is important to note that the weighting of these companies is still based on their market capitalization adjusted for free float. As a consequence of that, the correlation between the FTSE Bursa Malaysia Top 100 and the FTSE Bursa Malaysia KLCI is stronger than with the FTSE Bursa Malaysia Mid 70.
MSCI Malaysia
Finally, the MSCI Malaysia is a stock market index calculated by the US company MSCI. The number of stocks within the index is not constant, but fluctuates over time.
Thus, the MSCI Malaysia includes all Malaysian companies that are part of the global MSCI Emerging Markets index.
This index also weights stocks based on their free-float-adjusted market capitalization. And updates are carried out regularly throughout the year with the goal of keeping it representative of emerging stock markets in general, and Malaysia in particular.
Some of the largest companies in the index are Public Bank and Malayan Banking. The banking sector heavily dominates the MSCI Malaysia.
Additional details can be found on the MSCI website.
I hope you found this information about Malaysian stock market indices useful. To learn about stock market indices in other promising countries, check out the following section:
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