Kuala lumpur: The work towards expanding the FTSE Bursa Malaysia KLCI Index (FBM KLCI) beyond its current 30 constituents will help reduce the banking sector's weighting in the benchmark index, said Employees Provident Fund (EPF) chief investment officer Mohamad Hafiz Kassim.

According to BERNAMA News Agency, there have been consultations on broadening the definition of the FBM KLCI beyond the top 30 constituents, which is seen as a positive development. Mohamad Hafiz Kassim highlighted that the proposed expansion would alleviate the pressure on banks to deliver high performance numbers, as the index is currently heavily weighted towards the banking sector, which makes up approximately 40 percent of the FBM KLCI. Among the index's top 10 constituents are four major banking stocks: Maybank, CIMB Group, Public Bank, and AMMB Holdings.

In April, FTSE Russell suggested reviewing the index methodology to enhance market representation and reinforce sector diversification. The proposed changes aim to expand the FBM KLCI from 30 to 50 constituents, with an optional 10 percent company-level capping mechanism to mitigate concentration risk. These changes are intended to ensure that the FBM KLCI and FBM70 remain effective benchmarks for the Malaysian market.

The implementation of the proposed changes to the FBM KLCI and FBM70, pending approval, is projected to take effect on either December 21, 2026, or June 21, 2027, contingent upon the results of the market consultation.