Bursa Malaysia and Hong Kong Exchanges and Clearing (HKEX) have launched the HKEX Bursa Malaysia Large Cap Index, a co-branded index designed to strengthen capital market integration between Malaysia and Hong Kong. This index tracks 60 large-cap companies – 30 Malaysian blue chips and 30 Hong Kong-listed stocks eligible for southbound trading – and provides a single investable benchmark. It maintains a fixed geographic split of 62% to Hong Kong stocks and 38% to Malaysian stocks, with semi-annual reviews and quarterly rebalancing. The index uses a free-float market capitalization-weighted methodology and constituents are selected based on market capitalization, liquidity, and listing history.
The launch coincided with the signing of a Memorandum of Understanding (MOU) between the two bourses. This MOU outlines collaboration across five key areas: facilitating dual listings, co-developing indices, expanding access to Exchange Traded Funds (ETFs), enabling shariah-compliant securities, and exploring opportunities in carbon markets. The partnership aims to enhance market vibrancy, expand opportunities for listed companies and investors, and boost Malaysia’s global investment visibility, according to Fad’l Mohamed, CEO of Bursa Malaysia. HKEX CEO Bonnie Chan emphasized that this tie-up is part of HKEX’s strategy to deepen regional engagement and build a multi-asset ecosystem to attract global liquidity.
This initiative builds on Bursa Malaysia’s earlier cross-border index collaboration with the Shenzhen Stock Exchange in 2020, which focused more on profiling companies. The new HKEX Bursa Malaysia Large Cap Index, however, places a stronger emphasis on product development, with plans for an ETF based on the index to be launched in Hong Kong within six months and potentially become eligible for Southbound Connect flow a year from now. This would allow mainland Chinese investors to invest in the fund. Although both HKEX and Bursa Malaysia had separately explored collaborations with the Singapore Exchange (SGX), these discussions did not yield significant results, making this partnership a fresh push for regional market integration and cross-border investment opportunities.
