Bursa Launches Three New Palm Oil Plantation Indices

Bursa Launches Three New Palm Oil Plantation Indices

Kuala Lumpur – Bursa Malaysia Bhd yesterday launched three new FTSE Bursa Malaysia Palm Oil Plantation Index series that allow investors to track the performance of selected major Asian listed plantation companies. The FTSE Bursa Malaysia Palm Oil Plantation Indices include:

  • The ringgit-denominated FTSE Bursa Malaysia Palm Oil Plantation Index based on FTSE Bursa Malaysia Emas,
  • The ringgit-based FTSE Bursa Malaysia Asian Palm Oil Plantation Index, and
  • The US dollar-based FTSE Bursa Malaysia Asian Palm Oil Plantation Index.

Chief executive officer Datuk Yusli Mohamed Yusoff told a press conference that Bursa was considering to launch a new palm oil contract based on the three indices but “no time frame has been set.” In addition, he said, Bursa also welcomed more big regional plantation companies, particularly from Indonesia, to seek listing on the local exchange. The three indices include the world’s liquid and large-cap companies that track the performance of Asian listed companies which derive their substantial revenues from palm oil-related activities.

“We expect the new indices to help boost foreign interest on the local stock market which has been plagued by a lack of liquidity and low free-float due to high government ownership,” he said. The new indices would also offer a platform for growth of oil palm plantation-related capital market products such as Exchange Traded Funds and other structured products, added Yusli.

The ringgit-based FTSE Bursa Malaysia Palm Oil Plantation Index will have 30 Malaysian public-listed companies with plantation revenue contribution of over 25% and capping maximum of 10% on index weighting. The other two regional plantation indices will track 11 listed companies from Malaysia, four from Singapore and three from Indonesia, including IOI Corp Bhd, Sime Darby Bhd, Wilmar International Plc and Golden Agri-Resources Ltd.

Yusli also said Bursa operates the world’s most liquid crude palm oil (CPO) futures contract with over 20,000 contracts traded per day. In April, CPO futures recorded an all-time high of 442,220 contracts with a daily average of 20,101 contracts traded.

“The three years back cast values of the new indices indicate that palm oil plantation companies’ stocks have outperformed Bursa’s benchmark KLCI by more than 39%,” he said. This indicated that palm oil-related products had a good following by investors, Yusli said, adding that the launching of the new indices would elevate the profile of Malaysia’s palm oil industry.

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