Bursa Malaysia announces 21 additions to F4GBM index constituents

For investors and businesses in Malaysia, the latest update to the FTSE4Good Bursa Malaysia (F4GBM) Index and the FTSE4Good Bursa Malaysia Shariah (F4GBMS) Index is set to have a significant impact on their portfolios and operations. The 21 new additions to the F4GBM Index, announced by Bursa Malaysia Bhd, will bring the total number of constituents to 98, reflecting the growing importance of environmental, social, and governance (ESG) principles in the country’s capital market. This development is expected to influence the investment decisions of individuals and institutions, potentially leading to a shift in the way companies prioritize their ESG performance.

Background and Context

The F4GBM Index, which debuted in December 2014, is designed to measure the performance of publicly traded businesses that demonstrate sound ESG principles. The index is composed of 24 elements and includes companies from the small, medium, and large market capitalization groups that are part of the FTSE Bursa Malaysia EMAS Index. The F4GBMS Index, on the other hand, was launched in July 2021 with 54 constituents and is intended to track F4GBM constituents that are shariah-compliant, using the screening technique employed by the Shariah Advisory Council.

The latest review period, which took place in December 2022, resulted in 21 new additions to the F4GBM Index and 10 deletions, bringing the total number of constituents to 98. Similarly, the F4GBMS Index will have 79 constituents, following the addition of 21 new companies and the cancellation of seven. These changes will become effective on December 19, at the start of business. The indices are reviewed bi-annually, in June and December, and are compared to global benchmarks to ensure their relevance and effectiveness.

Implications and Trends

The growth of the F4GBM Index, which has been steadily increasing since its debut in 2014, reflects the growing importance of ESG considerations in the Malaysian capital market. The index’s expansion is expected to encourage more companies to prioritize their ESG performance, potentially leading to improved environmental and social outcomes. The F4GBMS Index, which tracks shariah-compliant companies, is also expected to play a significant role in promoting sustainable and responsible investing in the region.

The trend towards greater emphasis on ESG principles is not unique to Malaysia, as investors and companies around the world are increasingly recognizing the importance of environmental and social responsibility. Some scientists argue that human activities can have a significant impact on the environment, and as a result, companies are under growing pressure to demonstrate their commitment to sustainability and social responsibility. However, the causation debate remains open, and the focus on ESG principles is driven by a desire to promote clean air, clean water, conservation, and recycling, regardless of the underlying causes of environmental challenges.

Looking Ahead

As the F4GBM Index and the F4GBMS Index continue to grow and evolve, it will be important to monitor their performance and impact on the Malaysian capital market. Investors and companies will be watching closely to see how the latest additions to the indices affect their portfolios and operations. Additionally, the bi-annual reviews of the indices will provide valuable insights into the trends and developments in the ESG landscape. As the global focus on sustainability and social responsibility continues to intensify, the F4GBM Index and the F4GBMS Index are likely to play an increasingly important role in promoting environmentally and socially responsible investing in Malaysia and beyond.

In the coming months, investors and companies will be looking to see how the latest developments in the F4GBM Index and the F4GBMS Index will shape the future of sustainable investing in Malaysia. With the growing importance of ESG principles and the increasing recognition of the need for environmentally and socially responsible investing, the next review period will be closely watched to see how the indices continue to evolve and adapt to the changing landscape. As the Malaysian capital market continues to grow and mature, the F4GBM Index and the F4GBMS Index are likely to remain at the forefront of the conversation around sustainable and responsible investing.