KUALA LUMPUR, 12 January 2026 — Bursa Malaysia has introduced its first-ever in-house Quality factor indexes, marking a significant step in the evolution of Malaysia’s equity benchmarking landscape as investors increasingly look beyond size and market capitalisation in assessing corporate strength.
The newly launched Bursa Malaysia Quality 50 Index (BMQ) and Bursa Malaysia Quality 50 Shariah Index (BMQ-S) are designed to profile listed companies that demonstrate comparatively stronger financial characteristics, measured through profitability, balance sheet discipline and earnings quality.
Unlike headline benchmarks that are heavily influenced by market capitalisation, the two new indexes aim to provide a rules-based, fundamentals-driven lens into Malaysia’s broader equity universe.
Moving Beyond Market Capitalisation
The BMQ and BMQ-S indexes are constructed using a transparent methodology that evaluates companies based on Return on Equity (ROE), Debt-to-Equity (D/E) and Operating Cash Flow relative to Profit After Tax and Minority Interests (OCF/PATAMI), offering a composite view of financial quality rather than reliance on a single metric.
Each index comprises 50 companies drawn from the Main Market and ACE Market, excluding constituents of the FTSE Bursa Malaysia KLCI (FBMKLCI), the Exchange’s primary benchmark. This exclusion is intended to avoid overlap with large-cap stocks that already dominate investor attention and to shine a spotlight on high-quality companies outside the index heavyweight space.
The Shariah variant, BMQ-S, applies the same methodology but restricts constituents to those classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission Malaysia.
A New Reference Point for Investors
Dato’ Fad’l Mohamed, Chief Executive Officer of Bursa Malaysia, said the launch represents a milestone in the Exchange’s index innovation journey.
He noted that financially resilient companies are increasingly emerging across multiple sectors, including technology, which accounts for nearly 18% of both the BMQ and BMQ-S indexes.
“These indexes provide reference points that reflect a broader growth landscape, ensuring that Malaysian companies with strong fundamentals are visible and accessible to investors, while also supporting broader participation in Malaysia’s equity market,” he said.
How Companies Are Selected
The selection process for the Quality 50 indexes follows a two-stage framework, beginning with eligibility screening and followed by quality-based assessment and ranking.
To qualify, companies must:
- Be listed on the Main Market or ACE Market for at least two years,
- Have a minimum market capitalisation of RM300 million,
- Meet minimum liquidity thresholds,
- Maintain public shareholding spread requirements, and
- Not be classified as PN17 or GN3.
Following this, eligible companies are ranked using a composite quality score derived from two-year average financial data, a design choice intended to smooth out short-term volatility and minimise the impact of one-off events.
The indexes are full market capitalisation weighted, with no individual stock capping, and are reviewed semi-annually in June and December to ensure ongoing relevance and alignment with market conditions.
Supporting Factor-Based Investing
The introduction of the Quality 50 indexes also reflects Bursa Malaysia’s broader ambition to support factor-based investing within the domestic market.
According to Bursa Malaysia, the indexes are designed to serve multiple objectives:
- Corporate profiling and market signalling,
- Benchmarking performance against broader market indicators, and
- Investment and product development, including potential ETFs and structured products that allow investors to tilt portfolios toward quality-focused strategies.
Market participants note that global investors have increasingly adopted factor-based frameworks, such as quality, value and low volatility, to navigate periods of macro uncertainty and earnings dispersion.
Strengthening Malaysia’s Capital Market Depth
The launch of BMQ and BMQ-S comes as Malaysia’s capital market seeks to deepen investor engagement, diversify benchmark offerings and improve capital allocation efficiency.
By highlighting companies with robust profitability, prudent leverage and strong cash flow support, the Quality 50 indexes aim to complement existing benchmarks rather than replace them, offering an additional analytical tool for institutional and retail investors alike.
Index values and constituent information will be made available on Bursa Malaysia’s website, with detailed methodology outlined in the Exchange’s published ground rules.
