PSE tightens screening process for index listing
MANILA, Philippines—The Philippine Stock Exchange has tightened the process of selecting companies to be included in its roster of blue chips under the 30-company main-share index, PSEi, and other sub-indices.
The PSE announced on Tuesday the revision of its policy on managing the PSEi series effective September, citing the need to “enhance the quality of the PSE indices, reflect corporate actions in a timely manner, and elevate index standards to international best practices.”
Apart from the PSEi, the index series consist of six sector indices and the all-shares index.
“The revision should enhance investor confidence and challenge our listed companies to make their shares more attractive to investors,” PSE president and chief executive officer Hans Sicat said in a statement.
Under the amended policy, companies should meet three revised criteria to qualify to the PSEi: The company’s free float level should be at least 12 percent, up from the current 10 percent; it must rank among the top 25 percent in terms of median daily value in nine out of the 12 months in review, from P5 million, and the ranking of qualified companies should be based on full market capitalization instead of float market capitalization.
The ranking will no longer consider the sector representation of companies and that eligible companies will be treated equally. At present, the selection of companies is done in two stages. First, the two highest-ranked companies from each of the six sectors will fill the first 12 slots to ensure sector representation. Second, the remaining slots are occupied by the 18 highest-ranked companies from among the other qualifiers.
To be eligible for the sector indices, common stocks of the company must belong to the top 50 percent in terms of median daily trade per month in eight out of the 12 months in review.
The index recomposition review will also be moved to March and September yearly from May and November.
The other changes are: the creation of a “reserve” list to be used in the event that certain firms are deleted from the PSEi; stricter rules for insertions and removals, and additional provisions to better reflect the effectiveness of the PSEi as a market indicator.
Meanwhile, the PSE’s latest index review paved the way for the return of Security Bank to the PSEi , replacing China Banking Corp.
The companies added to the sectoral indices are: Integrated Micro-Electronics Inc., Republic Cement Corp. and San Miguel Brewery Inc. for the industrial index; Anglo Philippine Holdings Corp. and South China Resources Inc. for the holding firms index; Polar Property Holdings Corp. for the property index; Leisure & Resorts World Corp. for the services index; and Apex Mining Co., Inc., Atok-Big Wedge Co. Inc. and United Paragon Mining Corp. for the mining & oil index.
