PSE to change index stocks on May 11

China Banking Corp. (CHIB), Metro Pacific Investments Corp. (MPI) and ABS-CBN Broadcasting Corp. (ABS) will form part of the PSE index (PSEi), a roster of blue chip firms, starting May 11, the Philippine Stock Exchange said Wednesday. CHIB and MPI will join the PSEi for the first time since the exchange shifted to a computation method based on free float-adjusted market capitalization in 2006. ABS is returning to the PSEi a year after it was removed during an index review in May. “The review of indices continues to reflect changes in trading activity and liquidity, which are part of the objective standards the PSE developed in 2006. The selection criteria adopted by the PSE allow it to consistently offer independent and transparent benchmark indices that investors can use as a tool for measuring the market’s performance," PSE chief operating officer Val Antonio B. Suarez said in a statement. MPI, CHIB and ABS would be replacing DMCI Holdings Inc., First Gen Corp. and The Philippine Stock Exchange Inc., which would be removed from the main index, the exchange said. The country’s 30 most traded, most liquid and well-capitalized firms are part of the PSEi. The exchange said 16 firms were also added as new members of the various sector indices. Chemrez Technologies, Inc. and Transpacific Broadband Group International Inc. shall be removed from the Industrial and the Services indices, respectively, raising the number of companies in the sector indices to 85 from 71. To be a part of the PSEi, a listed company must satisfy five criteria – the free float level, liquidity, volume turnover, tradability and market capitalization. Free float, or public float, is the portion of the outstanding shares that are freely available and tradable in the market that players refer to as non-strategic shareholdings. The free float portion must represent at least 10 percent of the outstanding shares of a listed stock. To pass the liquidity criterion of the main index, a stock must have an average daily value turnover of P5 million and a volume turnover of at least 10 percent of the free float shares. To meet the tradability criterion, a company's shares must be traded at least 95 percent of the days that its shares are eligible for trading. The free float market capital is computed by the weighted average price of a stock during a particular review period, the exchange said. Companies that pass the first four criteria are ranked from highest to lowest, based on free float-adjusted market capitalization. In selecting companies for the sector indices, the PSE considers an average daily trading value of at least P1 million with the company’s shares traded in at least 75 percent of the total days the shares are eligible for trading. The PSE’s regular review of indices covered the trading activities between Jan. 1 and Dec. 3. The last change in the composition of the PSE’s indices was on Nov. 3. The PSE operates the only stock exchange in the Philippines with 250 listed companies and 132 operating trading participants. —SVD, GMANews.TV