News
Co-operation Agreement dated 12 January 2006 between Bursa Malaysia Berhad ("Bursa Malaysia") and FTSE Group ("FTSE") to create a new series of equity indices for Malaysia
BackMar 24, 2006
| General Announcement Reference No BM-060322-63046 |
| Company Name | : | BURSA MALAYSIA BERHAD |
| Stock Name | : | BURSA |
| Date Announced | : | 24/03/2006 |
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| Type | : | Announcement |
| Subject | : | Co-operation Agreement dated 12 January 2006 between Bursa Malaysia Berhad ("Bursa Malaysia") and FTSE Group ("FTSE") to create a new series of equity indices for Malaysia |
Contents :
With reference to the announcement dated 12 January 2006, we are pleased to announce that Bursa Malaysia, in collaboration with FTSE will be launching phase 1 of the new FTSE Bursa Malaysia index series in June 2006 which comprise 6 new indices ("New Indices") i.e. 3 tradable indices and 3 benchmark indices as set out in Table 1 below. The basic criteria for constructing the 6 new indices are as set out in Table 2 below. The index series is to be used as the basis for the creation of investment products such as Exchange Traded Funds ("ETFs"), derivatives and over the counter ("OTC") products.
In designing the index series for phase 1, the Index Universe will consist only of Bursa Malaysia Main Board companies. These Main Board companies are then filtered by market capitalization such that the FTSE Bursa Malaysia EMAS Index will represent about 98% of the full market capital value of all the Main Board companies. The 98% are free float adjusted and tested for liquidity before being weighted on to the various indices. The remaining 2% of the companies on the Main Board are free float adjusted and go on to be part of the FTSE Bursa Malaysia Fledgling Index.
Free float is defined as the share capital of a company that is freely available for trading by international investors. In determining the free float of a company, "strategic shareholdings" are considered restricted shareholdings, which include the following:-
(1) Trade investments including cross-holdings;
(2) Holdings by directors and founding families;
(3) Restricted holdings by employees;
(4) Government stakes; and
(5) Holdings that are subject to lock-in clauses.
In relation to liquidity, the test applied is that the free float adjusted total issued shares traded must be more than 10% annually.
FTSE Bursa Malaysia EMAS Index will replace the current EMAS Index with effect from the launch date of New Indices. However, the existing Kuala Lumpur Composite Index ("KLCI") will currently be maintained and run concurrently with FTSE Bursa Malaysia index series. The New Indices will not have any material impact on the earnings of Bursa.
This announcement is dated 24 March 2006.
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Table 1
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| No. | New Indices | Description |
| 1. 2. 3. |
Tradable Indices FTSE Bursa Malaysia 100 Index: FTSE Bursa Malaysia Large 30 Index: FTSE Bursa Malaysia Mid 70 Index: |
comprising the top 100 large and mid cap companies on the Bursa Malaysia Main Board by market capitalization comprising the 30 largest companies in the FTSE Bursa Malaysia 100 Index by full market capitalization; the total market capitalization of these 30 companies is approximately 70% of the total market capitalization of the FTSE Bursa Malaysia 100 Index comprising the next 70 companies in the FTSE Bursa Malaysia 100 Index |
| 4. 5. 6. |
Benchmark Indices FTSE Bursa Malaysia EMAS Index: FTSE Bursa Malaysia Small Cap Index: FTSE Bursa Malaysia Fledgling Index: |
comprising the constituents of the FTSE Bursa Malaysia 100 Index and FTSE Bursa Malaysia Small Cap Index comprising the 101st company to the 200th company on the Bursa Malaysia Main Board comprising the remaining 2% of the Bursa Malaysia Main Board universe with no liquidity screening |
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Table 2
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| Index Universe | Bursa Malaysia Main Board |
| Investability Screens | Liquidity, investability and size screened and free float tested |
| Index Calculation | The index series will be calculated in real time |
| End of the Day Distribution | 19:00 local time, 11:00 GMT & 12:00 BST |
| Currency | Malaysian Ringgit, Euro, US Dollar, Yen and Sterling |
| Base Value / Date | 6000 / 30 December 2005 |