PSE revamps index as global economy slows trading activities
abs-cbnNEWS.com | 04/16/2009 3:28 PM
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In the Philippine Stock Exchange's (PSE) elite roster of blue chip listed companies, Aboitiz Power Corp. and GMA Network Inc. are in, while Petron Corp. and Union Bank of the Philippines (UnionBank) are out.
These adjustments mark the PSE's latest revamp of the PSEi, which is considered the Philippine equity market's key barometer index. It consists of the country's 30 most traded, liquid, and capitalized listed firms.
In a statement Thursday, the PSE said the changes will be effective May 4. The last revamp was in November 2008.
The PSE regularly reviews the composition of the index after the 2006 overhaul on how listed companies could qualify. The latest review covered trading activity from January to December 2008.
"It is important that we regularly update the composition of the indices to ensure that they appropriately capture the performance of sectors they represent. We believe the updates we made in the composition of the index helped us attain this as they take into account the impact of the global economic slowdown on the trading activity of some listed companies," PSE President and Chief Executive Officer Francis Lim said in the statement.
Main index
Petron failed to comply with the 10 percent minimum public or free float level while UnionBank will also be replaced in the index after its average daily value turnover went below the P5 million turnover requisite.
Both will be replaced by Aboitiz Power and GMA Network.
Listed companies in the PSEi's main index have to satisfy 5 criteria: the free float level, liquidity, volume turnover, tradability and free-float market capitalization. The free-float capitalization and liquidity requirement were introduced in 2006.
"The liquidity criterion remains our most stringent condition for companies to qualify into the PSEi. In the recent review, however, we also see the free float requirement playing a critical factor," PSE President and Chief Executive Officer Francis Lim said.
The requirement for free-float market capitalization, which means shares of the company not held by strategic partners and owners, serves as an incentive for companies to have a wide base of shareholders.
The top 30 in terms of free float market capitalization are included in the PSEi.
Companies in the main index must also be traded at least 95 percent of the total trading days to qualify for PSEi inclusion.
Sectoral indices
Meanwhile, the sectoral indices will also be adjusted. Twenty-one, or 9 percent, of the 241 listed companies in the PSE will be removed from the sectoral indices due to their failure to meet liquidity and tradability requirements.
Declines in the number of member-companies in the indices are due to the slower trading activity in 2008. Companies in the sectoral indices must have a daily average trading worth a minimum of P1 million. Their shares must also be traded at least 75 percent of the total days that it is eligible for trading.
In the financial index, only one company, Export and Industry Bank Inc. will be added to the list while three will be removed, namely, Bankard Inc., Sun Life Financial Inc. and Vantage Equities Inc.
After the changes are made, the financial index will consist of 13 companies from the existing 15 firms.
For the industrial index, Pepsi-Cola Products Phils. and San Miguel Brewery Inc. which both underwent initial public offerings in 2008, and TKC Steel Corp will replace Phoenix Petroleum Phils. Inc., Roxas Holdings Inc., and Vulcan Industrial & Mining Corp.
A total of 22 firms will comprise the industrial sector index after the recomposition is implemented.
For the holding firms, 5 companies will be dropped from the list, decreasing the current list to 13. Abacus Consolidated Resources & Holdings, Inc., Alcorn Gold Resources Corp., Filinvest Development Corp., Sinophil Corp. and Wellex Industries will be removed from the list.
For the property index, 11 companies will be stricken off the list, namely, Belle Corp., Crown Equities Inc., Cebu Holdings Inc., Ever-Gotesco Resources & Holdings Inc., Fil-Estate Land Inc., Metro Pacific Inc., MRC Allied Industries, Inc., Philippine Estates Corp., Philippine Realty & Holdings Corp., Sta. Lucia Land, Inc., and Uniwide Holdings, Inc.
Companies under the property index will be reduced to 10 from the current 21.
Meantime, the services index will reduce its list to 17 from the existing 20. Diversified Financial Network Inc., Island Information & Technology Inc. and Macroasia Corp. will no longer be part of the services index by May 4.
Lastly, the mining and oil index will shed off 6 in the list. These are Apex Mining Co. Inc., Abra Mining & Industrial Corp., Basic Energy Corp., Dizon Copper-Silver Mines, Inc., Semirara Mining Corp. and United Paragon Mining Corp., thus reducing the index to 12 companies from the present 18.
