OSK expects Maxis to be included in key market index

The listing could be timed to take place before an upcoming review of the FBM KLCI constituents scheduled for December 11, says OSK Research

MALAYSIAN Airline System Bhd (MAS), Petronas Dagangan Bhd or RHB Capital Bhd is likely to be removed from the stock market's key benchmark index to make way for the soon-to-be-listed Maxis Bhd, OSK Research said.

The local research house expects Maxis to be included in the FBM KLCI, which comprises 30 stocks at any one time.

It said the listing could be timed to take place before an upcoming review of the index constituents scheduled for December 11. The market largely expects a November listing for Maxis.

"As we believe Maxis may be included in the FBM KLCI to replace a less liquid and smaller capitalised component with a lower free-float, we believe that MAS, Petronas Dagangan and RHB Capital could potentially be replaced (in that order of possibility)," OSK's head of research Chris Eng said in a report yesterday.
The report studied how the FBM KLCI would be impacted should Maxis be included as an index component.

OSK had in the report assumed that Maxis may have a market capitalisation (cap) of RM41.2 billion and a free-float adjusted market cap of RM28.9 billion.

MAS was seen as the most likely candidate to be replaced on the index given that it has a smaller market cap, is relatively illiquid and has a low free-float, or proportion of shares available for trade on the stock market.
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Should MAS be replaced by Maxis, the latter would be the fifth largest component stock on the index, just ahead of Tenaga Nasional Bhd, which has a free-float adjusted market cap of RM26.6 billion.

Maxis' 5 per cent potential dividend yield would also make it the ninth highest dividend yielding stock on the FBM KLCI.

This may result in a repositioning of funds invested in dividend yielding stocks.

With the interest sparked by Maxis' upcoming initial public offering, the stock market could see some short-term fund inflow, Eng said.

He believes that the large-cap beneficiaries of this shot of excitement may include "liquid foreign darlings" such as CIMB Bhd, Genting Bhd and Axiata Bhd.