The Need for a Technology Sector

The main objectives of establishing the Technology Sector are to:

• assist investors in identifying technologically innovative companies, and
• encourage technologically innovative companies to seek a listing on Bursa Malaysia.

Companies to be Considered for Inclusion in the Technology Sector

A company in the Technology Sector should fit the following broad description:

• Its business growth and success depends on its ability to develop technology, or on its ability to significantly innovate and apply technology, resulting in incremental improvements in process and/or value-added products and services.
• The technology could be new or emerging in Malaysia but it may be matured technology or technology which could have existed for some time in a more advanced country. The company must invest in research and development (R&D) and have a dedicated team of qualified R&D personnel.
• It is recognised for its cability and achievement in technological innovation. These companies may be from various economic sectors but with the common feature of being technologically innovative.

Bursa Malaysia has initially identified the following areas which are readily recognisable as being involved in technological innovation:

• Computer hardware and software
• Electronics
• Telecommunications

Other areas will be included when appropriate.

In identifying the companies to be included in this sector, investors should be aware that a clear distinction is made between:

• companies which are only users of technology, and
• companies which are users as well as developers or innovators of technology.
  

Companies which will be considered for inclusion in the Technology Sector are those which are in the second category, i.e. users as well as developers or innovators of technology.

The Technology Index

With the establishment of the Technology Sector, a Technology Index was launched to provide a benchmark for investors who are interested in investing in technologically innovative companies.

The index represents both the Main Board Technology Sector and Second Board Technology Sector. The Technology Index is an all-share index comprising both Main Board and Second Board Technology Sector stocks.

The base date for the Technology Index is 30 December 1999, where the index value is 100. The methodology used is the weighted-average method currently used in the computation of other Bursa Malaysia indices.

Regular reviews of the list of companies to be included in the Technology Sector and Technology Index will be undertaken by the Bursa Malaysia Index Sub-Committee. The Index Sub-Committee will determine the inclusions and exclusions to the list that will be made based on companies' compliance with the selection criteria. This is consistent with the policy currectly exercised by Bursa Malaysia in its classification of companies for the various other sectors and indices.

The Index Sub-Committee comprises independent industry representatives.

Criteria for Classification Into the Technology Sector

The following criteria will be applied in determining the companies to be classified into the Technology Sector:

• A company's core activity will be determined by the contribution to profit and turnover, and investment in assets. The identified core activity will be one that is significantly affected by technological innovation.
• The technology the company is involved in should be new or emerging in Malaysia and not technology which has existed in Malaysia for many years.
• The company's investment in R&D or a commitment to undertake R&D.
• A dedicated R&D team made up of qualified personnel.