Philex Mining out, Emperador in.
Emperador Inc. (EMP), the liquor company of Filipino billionaire Andrew Tan, is the newest component of the 30-company Philippine Stock Exchange index (PSEi), an index generally regarded as a barometer of the country’s economic health.
Emperador is replacing Philex Mining Co. (PX) and the rebalanced index will take effect starting September 15.
The revision is part of the PSE’s regular review and recomposition of the PSE index twice a year — in March and in September — using several inclusion criteria.
PSE index Inclusion Criteria
The PSE considers the following factors when determining which companies are eligible to be included in the PSEi:
- 1. Free Float — the stock must have a public float or minimum public ownership of at least 12%;
- 2. Liquidity — stock must belong to the top 25% by median daily value turnover per month for at least nine out of 12 months; and
- 3. Full Market Capitalization — stock should be one of the highest-ranked market capitalization (MCAP), measured by the company’s stock price multiplied by the number of shares being publicly traded.
During the review period in March or September, a stock could be added to the index if it rises above the 25th position in terms of full market capitalization, replacing the company that ranks lower.
A company, meanwhile, could be removed if it falls below the 35th position in terms of full market capitalization.
Revised PSEi Composition, as of September 2014
With the exit of PX and the entry of EMP, the new 30-company PSE index will be composed of the following starting September 15.
- Ayala Corp. (AC)
- Aboitiz Equity Ventures (AEV)
- Alliance Global Group Inc. (AGI)
- Ayala Land Inc. (ALI)
- Aboitiz Power Corp. (AP)
- BDO Unibank (BDO)
- Bank of the Philippine Islands (BPI)
- Bloomberry Resorts Corp. (BLOOM)
- DMCI Holdings (DMC)
- Emperador Inc. (EMP)
- Energy Development Corp. (EDC)
- First Gen Corp. (FGEN)
- GT Capital Holdings (GTCAP)
- Globe Telecom (GLO)
- International Container Terminal Services Inc. (ICT)
- Jollibee Foods Corp. (JFC)
- JG Summit Holdings (JGS)
- LT Group Inc. (LTG)
- Manila Electric Co. (MER)
- Metropolitan Bank & Trust Co. (MBT)
- Megaworld Corp. (MEG)
- Metro Pacific Investments Corp. (MPI)
- Petron Corp. (PCOR)
- Robinsons Land Corp. (RLC)
- Semirara Mining Corp. (SCC)
- SM Investments Corp. (SM)
- San Miguel Corp. (SMC)
- SM Prime Holdings (SMPH)
- Philippine Long Distance Telephone Co. (TEL)
- Universal Robina Corp. (URC)
Impact of EMP Inclusion in the PSEi
Generally, a stock that is newly included in the PSE index enjoys short-term price surges due to rebalancing movements of fund managers in response to the index recomposition.
Local stocks resource PinoyInvestor has this report on the inclusion of Emperador in the PSEi:
“Despite disappointing net income of EMP (down 3.6% in the 1st Half 2014), EMP’s inclusion in the PSEi provides an opportunity to buy the stock, especially since EMP has just come from a year-to-date low of PHP 10.32.”
The complete Special Report is available for FREE to members of PinoyInvestor.
Revised Sector Indices
In addition to the PSEi recomposition, sector indices will also have addition and elimination of stocks.
The Financials index, for instance, will have two more stock components: Bright Kindle Resources and Investments, Inc. (BKR) and Sun Life Financial, Inc. (SLF).
The Industrial index will add three new stocks — Concepcion Industrial Corporation (CIC), Del Monte Pacific Limited (DMPL) and Roxas Holdings, Inc. (ROX) — and will exclude Greenergy Holdings Incorporated (GREEN).
The Holding Firms index will remove AbaCore Capital Holdings, Inc. (ABA), Minerales Industrias Corporation (MIC), and Solid Group, Inc. (SGI).
Meanwhile, the Property index will include two new components: Starmalls, Inc. (STR) and Suntrust Home Developers, Inc. (SUN) while two other companies A. Brown Company, Inc. (BRN) and Cyber Bay Corporation (CYBR) will be removed.
The Services index will see four new additions: DFNN, Inc. (DFNN), Harbor Star Shipping Services, Inc. (TUGS), Robinsons Retail Holdings, Inc. (RRHI) and Travellers International Hotel Group, Inc. (RWM) while IP E-Game Ventures, Inc. (EG) will be removed.
For the Mining and Oil index, Dizon Copper Silver Mines, Inc. (DIZ) will be excluded.
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