Technology, construction to gain as expanded FBM KLCI cuts bank, utility weights [WATCH]

KUALA LUMPUR: The expansion of the FBM KLCI index, set to commence in December 2026, will lessen the influence of banking and utilities, analysts predict. Technology, construction, and consumer sectors are projected to gain prominence, according to the experts. Hong Leong Investment Bank Bhd (HLIB) anticipates technology will be the primary beneficiary, with its representation growing from 0 per cent to 3.21 per cent.

Construction is expected to be the most significant gainers, with its weight increasing by 82 basis points to 151bp. Banking and utilities, however, are projected to experience notable weight reductions, with banking's weight decreasing by 338 basis points to 621bp and utilities' weight declining by 140 basis points to 257bp. Sectors such as healthcare, oil and gas, plantation, property, and telecommunications are estimated to maintain relatively unchanged weights.

MBSB Research anticipates banking's weighting to decline by 5.85 percentage points, from 41.88 per cent to 36.03 per cent, while utilities' weighting is expected to fall by 2.60 percentage points, from 16.83 per cent to 14.23 per cent. Conversely, technology, consumer products and services, real estate, industrials, energy, consumer, and technology sectors are set to receive fairer representation, with technology's new weighting estimated at about three per cent.

The FBM KLCI expansion, reducing concentration in large-cap sectors and broadening industry representation, is anticipated to provide a more accurate benchmark of the Malaysian equity market.