IOI Corp is largest KLCI component stock

31 October 2007

Its share price has surged and market cap is at RM47bil

By KATHY FONG

PETALING JAYA: The surge in IOI Corp Bhd's share price has made the plantation group the largest component stock on the KL Composite Index (KLCI) in terms of weighting, topping the usual names Malayan Banking Group Bhd (Maybank), Tenaga Nasional Bhd (TNB) and Telekom Malaysia Bhd (TM).

According to Bloomberg, IOI Corp’s weighting on the benchmark KLCI was 6.24% based on yesterday’s closing of RM7.90, followed by Maybank 5.74% and TNB 5.35%.

IOI Corp’s market capitalisation (cap) has ballooned to RM47bil compared with Maybank’s RM43.2bil and TNB’s RM40bil.

Public Bank Bhd’s weighting on the KLCI was also gaining amid the rise of its share price to a record high of RM11.10 yesterday. The bank was the fourth biggest KLCI component stock with market cap of RM39bil.

Investment analysts said the change on the weighting of the component stocks (in terms of their market cap) indicated the investing interest in Bursa Malaysia.

“The market seems to be getting more efficient now. Companies with good management and earnings prospects are given premium,” said the head of equity research of a foreign investment bank.

“So, TMT may not always be the choice of stocks for investors who want have index exposure now,” he quipped.

TMT, which stands for TM, Maybank and TNB, once regarded the “must have” component stocks for fund managers who needed to benchmark their portfolio performance to the KLCI’s movement.

IOI Corp’s share price has been surging in tandem with rising crude palm oil prices that rose above RM2,900 per tonne.

The stock was seen as one of the most efficient plantation groups in Malaysia due to the hands-on management led by founder Tan Sri Lee Shin Cheng, analysts said.

KL Kepong was also catching up with a weighting of 2.18% as its share price continued to climb.

Sime Darby Bhd, which will be relisted under the name Synergy Drive Bhd next month after the merger with five other companies, was the second biggest plantation counter based on the last traded price of RM11.20 on Oct 17. The conglomerate’s weighting was at 3.75%.

Investment analysts observed that many government-linked companies (GLCs), except for Bumiputra-Commerce Holdings Bhd, were mostly lagging behind the current market rally.

Ironically, the share price of Maybank and TNB had fallen below last year’s closings although the KLCI had been breaking new records this year. TNB slid nearly 15% and Maybank fell 6% year-to-date versus the 29% rise on the KLCI.

The better performer among GLCs was Bumiputra-Commerce with a hefty gain of 44.5% since the beginning of the year.

“The share price performance may be a reflection on how investors think of the GLC revamp,” said an analyst.

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