FTSE, Bursa Malaysia move to semi-annual liquidity review of index series

KUALA LUMPUR: The FTSE Bursa Malaysia Index Advisory Committee has decided on a semi-annual liquidity review of the FTSE Bursa Malaysia Index Series from an annual basis to better reflect the liquidity of the investable market.

According to their joint statement by BURSA MALAYSIA BHD [] and FTSE Group yesterday, the increase in frequency of liquidity review in response to Malaysia’s market initiatives is to enhance its capital market and liquidity.The liquidity review will be conducted semi-annually in June and December starting from June 2010 based on turnover in the 12 months prior to the review. Constituents of the FTSE Bursa Malaysia Small Cap Index and FTSE Bursa Malaysia Fledgling Index will also be reviewed semi-annually starting from the June 2010 review.

The said indices played an increasingly important role in today’s markets as a tool in stimulating domestic investment and attracting global capital flows and the move would provide more robust indices that were in tune with the market liquidity.

Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said liquidity was a key area of focus for Bursa Malaysia and the increase in frequency of the market review would enable market participants to track the index in a broader and more comprehensive manner.

“This will also allow investors to have a closer assessment on the performance of public-listed companies to create a more efficient market,” he said. FTSE Group Asia Pacific’s Paul Hoff said: “As an index provider, it is important to work with the investment community and local index partners such as Bursa Malaysia to understand the needs of both domestic and international investors, ensuring these needs are addressed through a robust index methodology.

“We have found that more frequent reviews aid investment professionals who track the indices by improving the replicability of the index.”