PSE completes review of listed firms in index using 'free float'

PSE completes review of listed firms in index using ‘free float’

 

Manila Bulletin
March 18, 2006
By James A. Loyola

The Philippine Stock Exchange (PSE) has completed a new review of all listed companies, using the "free float" method and two other stringent criteria to determine the composition of the PSEi, the new name of the index.

 

As an offshoot of the review, the composition of the PSEi underwent a change as two firms — Holcim Philippines and Pilipino Telephone Corporation — lost their slots in the renamed index to Empire East Land Holdings and Manila Mining Corporation.

 

The composition of five of the six sectors under the PSE’s classification standard also was altered after the PSE revised the criteria in selecting the list of firms for the sectoral indices.

 

PSE president Francis Lim said that the Exchange determined the PSEi composition with the same objective, transparent and dispassionate manner it had observed in determining the components of the old PSE Composite Index.

 

"We at the PSE believe that the PSEi review, which we intend to conduct every six months, will promote more stock market growth and, in turn, enhance the value of the stocks," Lim stressed.

 

He added that PSE officials do not have a leeway to include or exclude a stock for the PSEi and the six sectors outside* *of the set of criteria.

 

"Stocks that do not pass any of the criteria are automatically excluded from the component stocks. We do not want to be accused of playing favorites in selecting the stocks to be included in the PSEi," Lim said.

 

The price movement of these firms will determine the direction of the PSEi starting April 3, 2006.

 

In computing the old PSE Composite Index, the PSE used only four criteria - full market capitalization, liquidity, tradability, and sector representation.

 

In the new formula, a listed company must satisfy five criteria - free float shares, free float market capitalization, tradability of 95 percent, average daily trading value and volume turnover ratio — to qualify for inclusion or retention in the prestigious list of PSEi companies.

 

Based on the review, the following stocks were selected to comprise the new index (PSEi): Aboitiz Equity Ventures, ABS-CBN Broadcasting Croporation, Ayala Corporation, Ayala Land, Banco de Oro Universal Bank, Bank of the Philippine Islands, Belle Corporation, Benpres Holdings Corporation, Digital Telecommunications Philippines, DMCI Holdings, Empire East Land Holdings, Equitable PCI Bank, Filinvest Land, First Philippine Holdings Corporation, Globe Telecom, International Container Terminal Services, Jollibee Foods Corporation, Lepanto Consolidated Mining Company, Manila Electric Company, Manila Mining Company, Manila Water Company, Megaworld Corporation, Metro Pacific Corporation, Metropolitan Bank and Trust Company, Petron Corporation, Philex Mining Corporation, Philippine Long Distance Telephone Company, San Miguel Corporation, SM Investments Corporation and SM Prime Holdings.

 

On the other hand, Bacnotan Consolidated Industries was deleted from the list of companies that make up the Holding Firms sector, because its tradability fell below the 75 percent requirement for inclusion in any of the sectors.

 

Macroasia Corporation was deleted from the Services sector also for failing the tradability yardstick.

 

In the combined Mining and Oil sector, Abra Mining and Industrial Corporation was excluded also for failing the tradability criterion, while Semirara Mining Corporation gained a slot in this sector.

 

The Industrial sector did not lose any of its existing composition and, instead, gained three new entrants. They are EEI Corporation, Trans-Asia Oil and Energy Development Corporation and Universal Robina Corporation.

 

The PSE added Robinsons Land Corporation in the list of companies comprising the Properties sector, while the composition of the Financial sector did not undergo any change.

 

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