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THE
Philippine Stock Exchange (PSE) said the composition of
its indices will go through another change following the
latest free float-based review of trading activity for
the full year 2007.
As an
offshoot of the review, the composition of the PSE index
(PSEi) will change. Four issues will be deleted and four
other issues will take their respective slots in the
main index. In all, the indices of six sectors indices
will take onboard 18 companies.
In a
statement, the exchange said six companies will make it
to the Services index; three to the Holding Firms index;
two each to the Industrial index, the Property index and
Mining & Oil Index; and one will be added to the
Financial index. At the same time, one company each will
be removed from the Financials, Services and Holding
Firms.
The PSE
does not set a limit on the number of companies that
make up the sector indices, but it limits to 30 the
number of firms in the PSEi, which is the main barometer
of local stock-price movements.
The
changes in the composition of the indices will take
effect on May 26. The price movement of these firms will
determine the direction of the PSEi six months or until
the PSE completes another index review. The latest
review covered trading activity from January 1 to
December 31, 2007.
Those
added to the PSEi are Philippine National Bank, Rizal
Commercial Banking Corp., Union Bank of the
Philippines
and Vista Land & Lifescapes Inc. Those to be removed are
ABS-CBN Broadcasting Corp., Belle Corp., DMCI Holdings
Inc., and Petron Corp.
The
Services index, whose list will go up from 16 to 21,
will remove one firm—Ionics Inc.—and add Diversified
Financial Network Inc., IPVG Corp., Island Information
and Technology Inc., Music Corp., Pacific Gaming Online
Systems Inc. and Transpacific Broadcast Group
International Inc.
The
Financial index list will go up to 17 with the inclusion
of Bankard Inc., and National Reinsurance Corp. of the
Philippines and the removal of Philippine Savings Bank.
The composition of the Holding Firms index will increase
from 20 to 23 with the entry of Alliance Global Group
Inc., ATN Holdings Inc., PAL Holdings Inc., and Unioil
Resources & Holdings Co. Inc., and removal of Alsons
Consolidated Resources Inc.
The
number of firms in the Industrial Index will inch up to
21 with the addition of Alaska Milk Corp. and TKC Steel
Corp.; the property Index to 24 with the inclusion of
Philippine Estates Corp. and Vista Land & Lifescapes
Inc.; and that of the Mining & Oil index will increase
to 17 with the entry of Benguet Corp. and Nihao Mineral
Resources International Inc.
In 2005,
the bourse decided to conduct a regular free float-based
review of the indices as part of a strategic program to
entice more companies to expand their ownership and
foster growth in the market.
The PSE
drew up a set of criteria to guide them in choosing the
basket of stocks to be included in the indices based on
their level of free float.
To
qualify for inclusion or retention in the list of PSEi
companies, a listed company must satisfy five
criteria—free-float shares, free-float-market
capitalization, tradability, average daily trading value
and volume-turnover ratio.
Free
float refers to the issued and outstanding shares of a
listed company that are not held by strategic partners
and owners. Free-float shares are freely tradable among
nonstrategic investors.
As
approved by the PSE board, the free-float portion should
represent at least 10 percent of the listed stock’s
shares outstanding.
In order
to pass the liquidity criterion for the main index, a
stock must have an average daily value turnover of not
less than P5 million within a review period. For the
sectoral indices, average daily liquidity must not fall
below P1 million during any given period in review.
Tradability means that during a period in review a stock
must be traded at least 95 percent of the total trading
days to qualify for PSEi inclusion. A lower 75-percent
tradability is required for inclusion in any of the six
sectors. |
