The Impact of Change to Components of Composite Index on the Affected Stocks

Based on the belief that stock market performance should reflect stock liquidity, Bursa Malaysia (BM) works with Financial Times Stock Exchange (FTSE) to introduce a new market index, known as FTSE-BM30 or FBM30, to replace Kuala Lumpur Composite Index (KLCI). With the introduction of FBM30 on 6th...

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Main Author:	Lu, Ming Pey
Format:	Thesis
Language:	eng eng
Published:	2010
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/2487/1/Lu_Ming_Pey.pdf https://etd.uum.edu.my/2487/2/1.Lu_Ming_Pey.pdf
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id	my-uum-etd.2487
record_format	uketd_dc
spelling	my-uum-etd.24872013-07-24T12:16:14Z The Impact of Change to Components of Composite Index on the Affected Stocks 2010 Lu, Ming Pey Taufil Mohd, Kamarun Nisham College of Business (COB) College of Business HG Finance Based on the belief that stock market performance should reflect stock liquidity, Bursa Malaysia (BM) works with Financial Times Stock Exchange (FTSE) to introduce a new market index, known as FTSE-BM30 or FBM30, to replace Kuala Lumpur Composite Index (KLCI). With the introduction of FBM30 on 6th July, 2009, KLCI was discontinued. FBM30 is composed of 30 blue chip stocks while KLCI is made up of 100 stocks. With the introduction of a new index with smaller number of stocks, at least 70 stocks that were previously used to calculate KLCI have to be dropped. The purpose of this study is to look at investors' reactions to the actual introduction of FBM30 on 6th July, 2009 on the prices of three stocks that are newly included into FBM30, 27 stocks from KLCI that remained in FBM30, and 73 stocks from KLCI that are dropped from FBM30. Using event study methodology, the findings reveal that companies that are newly included into and companies that remain in FBM30 have insignificant abnormal return. However, for the companies that are dropped from KLCI experienced significant abnormal negative return when FBM30 comes into effect. 2010 Thesis https://etd.uum.edu.my/2487/ https://etd.uum.edu.my/2487/1/Lu_Ming_Pey.pdf application/pdf eng validuser https://etd.uum.edu.my/2487/2/1.Lu_Ming_Pey.pdf application/pdf eng public http://lintas.uum.edu.my:8080/elmu/index.jsp?module=webopac-l&action=fullDisplayRetriever.jsp&szMaterialNo=0000769061 masters masters Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Taufil Mohd, Kamarun Nisham
topic	HG Finance
spellingShingle	HG Finance Lu, Ming Pey The Impact of Change to Components of Composite Index on the Affected Stocks
description	Based on the belief that stock market performance should reflect stock liquidity, Bursa Malaysia (BM) works with Financial Times Stock Exchange (FTSE) to introduce a new market index, known as FTSE-BM30 or FBM30, to replace Kuala Lumpur Composite Index (KLCI). With the introduction of FBM30 on 6th July, 2009, KLCI was discontinued. FBM30 is composed of 30 blue chip stocks while KLCI is made up of 100 stocks. With the introduction of a new index with smaller number of stocks, at least 70 stocks that were previously used to calculate KLCI have to be dropped. The purpose of this study is to look at investors' reactions to the actual introduction of FBM30 on 6th July, 2009 on the prices of three stocks that are newly included into FBM30, 27 stocks from KLCI that remained in FBM30, and 73 stocks from KLCI that are dropped from FBM30. Using event study methodology, the findings reveal that companies that are newly included into and companies that remain in FBM30 have insignificant abnormal return. However, for the companies that are dropped from KLCI experienced significant abnormal negative return when FBM30 comes into effect.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Lu, Ming Pey
author_facet	Lu, Ming Pey
author_sort	Lu, Ming Pey
title	The Impact of Change to Components of Composite Index on the Affected Stocks
title_short	The Impact of Change to Components of Composite Index on the Affected Stocks
title_full	The Impact of Change to Components of Composite Index on the Affected Stocks
title_fullStr	The Impact of Change to Components of Composite Index on the Affected Stocks
title_full_unstemmed	The Impact of Change to Components of Composite Index on the Affected Stocks
title_sort	impact of change to components of composite index on the affected stocks
granting_institution	Universiti Utara Malaysia
granting_department	College of Business (COB)
publishDate	2010
url	https://etd.uum.edu.my/2487/1/Lu_Ming_Pey.pdf https://etd.uum.edu.my/2487/2/1.Lu_Ming_Pey.pdf
_version_	1747827357121511424

The Impact of Change to Components of Composite Index on the Affected Stocks

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