Yahoo! Finance
Tuesday March 14, 1:33 PM
Philippine Stock Exch OKs New Index Name, Co Criteria
The new index name will be implemented on the first trading day in April, said Philippine Stock Exchange President and Chief Executive Francis Lim.
The PSEi will serve as the barometer of stock price movements on the bourse.
The renaming of the benchmark indicator is part of efforts the bourse's management are undertaking to boost brand recognition.
"We want to highlight the reforms we have put in place at the PSE (Philippine Stock Exchange), and we want investors to know that the brand PSEi is associated with these reforms," said Lim.
The board also approved the use of "free float" and two other yardsticks as additional criteria in determining which companies will be included in the PSEi.
Free float refers to the issued and outstanding shares of a listed company that aren't held by strategic partners and owners.
From April, a listed company can only qualify for inclusion in the PSEi basket if its free float is at least 10% of its outstanding shares.
Lim said the new requirement will benefit investors as it encourages listed concerns to widen their ownership base.
"The new computation, which we intend to review every six months, will promote more stock market growth and, in turn, enhance the value of the stocks," he said.
The other two new criteria are: free float market capitalization and volume turnover ratio, which requires at least 10% of the free float shares of a listed company to be traded.
The bourse currently uses only four criteria in determining the composition of the benchmark index - full market capitalization, liquidity, tradability, and sector representation.
To meet the liquidity criterion, a stock must have an average daily value turnover of no less than PHP5 million during a review period.
By tradability, the bourse means that a stock must be traded at least 95% of the total trading days during a review period.
Lim said the bourse will hold a parallel run for a week before the new index computation will be implemented.
Copyright © 2006 Dow Jones & Company Inc. All rights reserved.
No comments:
Post a Comment