Kuala Lumpur Composite Index

The Kuala Lumpur composite index is one of three primary stock indices of Malaysia. It was introduced in the year of 1986 in order to reflect the Malaysian stock market performance and also its economy. The Kuala Lumpur composite index, abbreviated as KLCI is often referred as the local stock market barometer of Malaysia.
When it was established, the KLIC was the prime stock index of the country but now is one of the three most referred indices of Malaysia. The other two stock indices of Malaysia are FMB30 and FMBEMAS both maintained by Bursa Malaysia.

There are approximately 650 companies in the Main Board in Malaysia and 100 companies among them are listed with Kuala Lumpur composite index. The index is a capitalization-weighted index and comprises of the multi sector companies.

The base year for the Kuala Lumpur composite index is 1977. The index is calculated by the following formula.

Index = {(Current aggregate Market Capitalization)/(Base Aggregate Market Capitalization)}x100

The major objectives of the KLIC are:

  • Reflecting the performance of listed companies, which represent the major sectors in the Malaysian economy
  • To ensure providing a standard performance for the Malaysian equity market
  • Reflecting the development and growth in the corporate and economic sectors of Malaysia

Some of the index rules of KLIC are:
Those companies whose market capitalization fall within the first two quartiles of the market capitalization of the Main Board (MB) companies are considered for inclusion.

The index constituents that are suspended for more than 3 months are excluded and the companies are only eligible for the inclusion after 6 calendar months from date when the suspension was uplifted

Those companies whose annual volume falls within the first three quartiles of the annual volumes of the MB companies are considered for inclusion

Those companies, which are owned by any KLCI constituent for more than 50% and which are defined as subsidiaries are excluded

The index constituents, which are experiencing two consecutive years of losses, are also excluded

According to the rule set by the KLIC, the market capitalization weighting of each sector should not exceed 125% of the sectoral weight of MBs in order to avoid over-representation of a particular sector.

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Last Updated on : 23rd June 2015

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