Thursday, May 03, 2007 PSE to revise indices composition this month
THE Philippine Stock Exchange (PSE) announced that its indices will once again undergo changes in composition following the latest free float-based review of these indices.
As an offshoot of the new PSE review, three firms will lose their slots in the 30-company PSEi, which is the main baro-meter of local stock price movements.
Their slots will go to three other listed firms that qualified for inclusion in the basket of goods making up the PSEi.
The composition of the six sector indices, on the other hand, will expand as the market activity continues to be more vibrant.
Changes
Francis Lim, PSE president and chief executive officer, said that the changes in the composition of the indices will take effect on May 16.
This means that the price movement of the firms will determine the direction of the PSEi from that date onwards for six months or until the PSE completes another index review.
The PSE decided in 2005 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 more stock market growth.
Reflective
“We at the PSE believe that the PSEi review will be more reflective of the movement of the stock market and thus, provide investors a better gauge in making investment decisions,” Lim said.
“We also reaiterate our position that the free float methodology in computing the index is good not only for investors but also for the listed companies,” Lim stressed. “It encourages companies to increase their free float; thus, increasing market activity of their stocks, which in turn induces an enhancement in their value.”
Retain
Lim noted that, in the past, companies that were included in the indices never really worked hard to retain their slots, especially in the prestigious main index, because the PSE did not conduct a regular review of the indices.
“Now these companies have to work harder and stay in shape, if they want to earn the prestige of being an index firm,” Lim declared.
The new additions to the PSEi are First Gen Corp., Manila Mining Corp. and Universal Robina Corp.
Taken out are Benpres Holdings Corp., Filinvest Land Inc. and Semirara Mining Corp.
Part
These three companies, however, still form part of the holdings, property and mining and oil indices, respectively.
On the other hand, all six sector indices have undergone changes in their composition.
Results of the latest review become basis for adding Philippine Savings Bank and Rizal Commercial Banking Corp. in the Financials Index.
Two firms—First Gen Corp. and Southeast Asia Cement Holdings Inc.— have joined the Industrial Index; while Ajo.Net Holdings Inc., APC Group, Inc. and Unioil Resources and Holdings Company Inc., have been added to the Holding Firms Index.
Gained
Five companies— Crown Equities Inc., Cyber Bay Corp., Kuok Phils. Properties Inc., Philippine Realty & Holdings Corp. and SM Development Corp.—have gained slots in the Property Index.
Metro Pacific Corp. (MPC), on the other hand, lost its place in this sector index.
But aside from MPC, no other company was taken out from any of the sector indices as an offshoot of the latest review.
Three firms—Boulevard Holdings Inc., Macroasia Corp. and Waterfront Philippines Inc.— have been added to the Services Index.
The Mining and Oil Index saw three new firms added to its roster, namely, Abra Mining and Industrial Corp., Geograce Resources Philippines Inc. and Vulcan Industrial and Mining Corp.
Criteria
Back in 2005, the PSE drew up a set of criteria to guide the Exchange in choosing the basket of stocks to be included in the indices, based on their level of free float.
The latest review covered the period January to December 2006.
The complete composition of the PSEi and sector indices can be accessed in the PSE website at www.pse.com.ph. (PR)
