MANILA, Philippines—The country’s main stock market barometer has been revamped for the second time this year to include DMCI Holdings Inc., Security Bank Corp. and the demutualized Philippine Stock Exchange itself.

These three companies will join the 30-stock PSE index and replace Vista Land and Lifescapes, Inc., Rizal Commercial Banking Corp. and ABS-CBN Broadcasting Corp. starting Nov. 3, the local stock exchange announced on Thursday.

"This recent review follows the same objective criteria for inclusion in the PSEi which we have set out in 2006. The need to recompose the members of the index becomes more relevant in light of the financial crisis that has impacted the landscape of trading in the market," PSE president Francis Lim said in a press statement.

Although DMCI and Security Bank have been previously part of this basket, this will be the first time that the PSE itself will be included. The bourse thus joins other listed exchanges—among them Singapore Exchange, Hong Kong Exchanges and Clearing Ltd. and Australian Securities Exchange—which are also part of the composite indices of their respective markets.

The PSE demutualized or converted from an organization owned by member-brokers into a stock corporation in 2001. It listed on its own bourse by way of introduction, or without selling new shares, in 2003 in accordance with the tightened securities law. New institutional investors came in to dilute brokers' via private placement in 2004 and the exchange has since then been actively traded in the local market.

The changes will take effect following the PSE's regular review of its main and sectoral indices for the trading activity from July 1, 2008 to June 30, 2009. This regular update aims to ensure that their constituents reflect the overall price movement of the market as well as the sectors they represent.

Leading construction firm DMCI Holdings and Security Bank, which consistently enjoys the highest return on equity among local banks, will return as PSEi members after being removed during the May 2008 and November 2007 index recomposition, respectively.

Among sectoral indices, all six sectors shall have fewer member-companies by a total of 18 firms. Only two companies will be added to the six sector indices. Metro Pacific Investments Corp. and Apex Mining Co., Inc. will become new members of the holding firms and mining and oil indices, respectively.

"The reduced number of members in the sector indices primarily reflects the slowdown in market trading during the review period," Lim explained.

To be included in the PSEi, which is a basket of 30 select stocks, a listed company must satisfy five criteria: the free float level, liquidity, volume turnover, tradability and free float market capitalization.

Free float, also known as public float, refers to the portion of the outstanding shares that are freely available and tradable in the market or those shareholdings which are non-strategic in nature. The free float portion should represent at least 10 percent of the outstanding shares of a listed stock.

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 to be considered for index retention.

The volume turnover criterion prescribes that the total volume of shares traded must be at least 10 percent of the company's public float.

To meet the tradability criterion, a company must be traded at least 95 percent of the days that its shares are eligible for trading.

Free float market capitalization is computed using the volume weighted average price of a listed stock during a particular review period.

Companies that pass the first four criteria are ranked from highest to lowest based on free float-adjusted market capitalization. The top 30 in terms of free float market capitalization are included in the PSEi.

In selecting companies that will comprise the sector indices, the PSE considers liquidity and tradability.

Under the liquidity criterion, the average daily trading value of the company's shares must be at least P1 million. Under tradability, the company's shares must be traded during at least 75 percent of the total days that these shares are eligible for trading.