Old Darlings, New Blood and a Rebalancing Reckoning: Rakuten Trade Names the Stocks to Watch as FBM KLCI Expansion Looms

Decision on the proposed expansion from 30 to 50 constituents may be as early as December 2026 — and investors who move early will benefit from the recalibration of the index

Kuala Lumpur, 26 May 2026 – The clock is ticking on one of the most significant structural changes to Malaysia’s benchmark equity index in over a decade. With Bursa Malaysia and FTSE Russell expected to deliver a final decision on the proposed expansion of the FBM KLCI — from 30 to 50 constituents — as early as December 2026, Rakuten Trade is laying out the investment case for investors seeking to position ahead of potential index-driven capital flows.

Kenny Yee, Head of Research at Rakuten Trade, believes the window for investors to position ahead of index-driven rebalancing flows is open now — and narrowing.

The Return of the “Old Darlings”

Should the expansion proceed, the most immediate impact would be a wave of compelled buying by index-tracking funds obliged to hold the new constituents. Kenny identifies the most likely returnees to the benchmark — stocks that were once synonymous with index-linked investing but have since dropped out of the 30-stock index.

“We may potentially see the return of several old market darlings such as Westports, Dialog Group and Genting Malaysia, alongside selected property and glove companies. These are names that passive funds and ETFs tracking the expanded index would need to accumulate — and that creates a window for investors who get there first.” — Kenny Yee, Head of Research, Rakuten Trade

Diluting the Bank Dominance

Beyond individual stock picks, Kenny sees the broader significance in what the expansion would do to the index’s current composition. The Financials sector presently accounts for approximately 35% of the FBM KLCI, with most other sectors representing just 3% to 11% of the benchmark. Under the expanded index, weighting is projected to ease toward the mid-30s.

“The expansion would help create a more balanced composition and better reflect the diversity of Malaysia’s economy today. Although the dilutive impact on banking stocks will not be excessive initially, we believe this is the start of a more comprehensive and structurally sound index.” — Kenny Yee, Head of Research, Rakuten Trade

Technology’s Long-Overdue Seat at the Table

Perhaps the most compelling new chapter in the expanded index would be the formal arrival of Malaysia’s technology sector — a segment that has grown considerably in global relevance yet remains largely absent from the benchmark that most funds are measured against.

“It would be encouraging to see the introduction of stronger technology representation within the benchmark, potentially led by Vitrox, Malaysian Pacific Industries and Inari Amertron. Malaysia’s semiconductor ecosystem has earned its place in the headline index.” — Kenny Yee

A Regional Trend Bursa Cannot Ignore

Rakuten Trade views the proposal as part of a wider regional movement towards broader, more representative benchmarks. Hong Kong’s Hang Seng Index has expanded its constituent count to 88 companies with further broadening expected, while Bursa Malaysia’s recent collaboration with Hong Kong Exchanges and Clearing — which produced the jointly-launched HKEX Bursa Malaysia Large Cap Index — signals that the local bourse is increasingly oriented towards building a benchmark that can attract regional and international capital flows.

“With Bursa’s recent collaboration with HKEX to launch the HKEX Bursa Malaysia Large Cap Index, we may well see the local bourse taking the same path as Hong Kong in building a larger, more internationally investable benchmark over time.” — Kenny Yee

As investors increasingly monitor institutional positioning and sector rotation opportunities ahead of the potential index expansion, access to deeper market visibility has become increasingly important. In line with this, Rakuten Trade recently made market depth free for all clients, giving investors deeper real-time visibility into Bursa stocks with up to five levels of buy and sell queue data.

Rakuten Trade advises investors to monitor the final consultation outcome from Bursa Malaysia and FTSE Russell closely. Subject to approval, any changes would take effect on 21 December 2026 or 21 June 2027, triggering one-time rebalancing flows from index-tracking funds that could benefit early movers in the likely inclusion of candidates.