FTSE, Bursa Malaysia launch palm oil indices
Bursa Malaysia and FTSE Group have launched the FTSE Bursa Malaysia Palm Oil Plantation Index Series. The series allows investors to access the palm oil industry in Malaysia and the rest of Asia. Bursa Malaysia considers this a further step towards positioning the country as a key centre for commodities-related capital markets offerings.
The three indices included in the series are the: FTSE Bursa Malaysia Palm Oil Plantation Index in Ringgit Malaysia, the FTSE Bursa Malaysia Asian Palm Oil Plantation Index in Ringgit Malaysia; and the FTSE Bursa Malaysia Asian Palm Oil Plantation Index in US dollars.
Both Asia-related palm oil plantation indices are based on the universes of developed, advanced emerging and secondary emerging countries as classified by FTSE in the Asia-Pacific region excluding Japan, Australia and New Zealand, and are available in gross- and net-of-tax versions.
The three indices allow investors to track the performance of listed companies which derive substantial revenues from palm-oil activities. The series also supports the creation of exchange-traded funds (ETFs), structured products and other index-linked investment instruments.
"These palm oil plantation related indices will complement our strong footing in the palm oil commodities related sector and strengthen our crude palm oil futures market as it bridges between the cash and derivatives markets for hedging and arbitraging opportunities," says Bursa Malaysia CEO Dato' Yusli Mohamed Yusoff.
FTSE managing director for Asia-Pacific, Paul Hoff, says agricultural or commodity investments are gaining popularity as investors look for niche opportunities.
Eligible constituents to the FTSE Bursa Malaysia Palm Oil Plantation Index in Ringgit Malaysia, must be a member of the FTSE Bursa Malaysia EMAS Index at the semi-annual review. To be included in the index a company is required to have greater than 30% of total revenue from palm oil activities. Existing constituents will no longer be eligible if total revenue from palm oil activities falls below 20%.
Stocks are capped at 10% on a quarterly basis to avoid over-concentration of any one stock. Free float screening is in-line with the FTSE Bursa Malaysia Index Series to ensure that only the investable opportunity set is included within the index. Liquidity screening is based on the methodology used in the FTSE Bursa Malaysia Index Series. Deletions may occur intra-review where companies are either delisted, subject to takeover, or cease to be an eligible constituent.
For the FTSE Bursa Malaysia Asian Palm Oil Plantation Index, only companies that have a market capitalisation of greater than $100 million are eligible for inclusion. To be included in the index a company is required to have greater than 30% of total revenue from palm oil activities. Existing constituents will also no longer be eligible if total revenue from palm oil activities falls below 20%. For a country to be eligible in the FTSE Bursa Malaysia Asian Palm Oil Plantation Index, its companies aggregated together must have an index weighting of greater than 2%.
The eligible universe comprises: Hong Kong, India, Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South Korea, Taiwan and Thailand. Stocks are capped at 18% on a quarterly basis to avoid over-concentration of any one stock. Both gross- and net-of-tax indices are available. Free float screening is in line with the FTSE Global Equity Index Series to ensure that only the investable opportunity set is included within the index. Liquidity screening is based on the methodology used in the FTSE Global Equity Index Series median liquidity rule. Deletions may occur intra-review where companies are either delisted, subject to takeover, or cease to be an eligible constituent.