GMA Network Inc. joins roster of elite listed firms

MANILA, Philippines - Starting May 4, GMA Network Inc. will be joining the elite roster of blue chip companies in the Philippine Stock Exchange index (PSEi), which consists of the country’s 30 most traded, most liquid, and well-capitalized listed firms. This was announced by the Philippine Stock Exchange (PSE) which changed the index’s composition after it undertook a review of its main and sectoral indices’ trading activity from January to December. The change in the index’s composition is the first since November 2008, the bourse said. To be included in the PSEi, which is a basket of select 30 stocks, a listed company must satisfy five criteria – the free float level, liquidity, volume turnover, tradability, and free float market capitalization. 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 during a period under review to be considered for index inclusion or retention. The volume turnover criterion prescribes that the total volume of the company’s shares traded must at least be 10 percent of its free float shares. The tradability criterion requires a company’s shares to be traded at least 75 percent of the total days that it is 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. Aboitiz Power Corp. will also be joining the PSEi, the PSE said. Consequently, Petron Corp. and Union Bank of the Philippines, another company of the Aboitiz Group, are to be dropped from the blue chip index. Petron was dropped from the roster after it failed to comply with a rule that requires 10 percent of its shares to be held by the public, also known as the free float level. Similarly, UnionBank was removed from the index after its average daily value turnover went below the P5 million requirement. “The liquidity criterion remains our most stringent condition for companies to qualify into the PSEi. In the recent review, however, we also see the free float requirement playing a critical factor," said Francis Lim, PSE president and chief executive officer. Introduced in 2006, the 10 percent free-float requirement was among those included in a set of new rules that overhauled the bourse’s criteria for PSEi inclusion. The shift to a free float capitalization weighted index serves as an incentive for companies that are more widely held by the public because companies with higher free float levels have a better chance of making it in the PSEi. Next: Changes will cut number of companies included in nearly all PSE sub-indices Changes will cut number of companies included in nearly all PSE sub-indices All six sectors except for the industrial index, will reflect a decline in the number of member-companies due to the slowdown in trading activity in 2008. One of the requisites for inclusion in the sector indices is a minimum P1 million daily average trading. In terms of the financial index, only one company, Export and Industry Bank Inc. will be added to the list while three will be removed, namely, Bankard Inc., Sun Life Financial Inc., and Vantage Equities Inc. After the changes are made, the financial index will consist of 13 companies from the existing 15 firms. On the other hand, companies that will be added to the industrial index are Pepsi-Cola Products Phils. and San Miguel Brewery Inc. which both underwent initial public offerings in 2008, and TKC Steel Corp. These firms will replace Phoenix Petroleum Phils. Inc., Roxas Holdings Inc., and Vulcan Industrial & Mining Corp. A total of 22 firms will comprise the industrial sector index after the recomposition is implemented. The holding firms sector will decrease to 13 companies from the present 18, after five companies will be dropped from the list. These are Abacus Consolidated Resources & Holdings, Inc., Alcorn Gold Resources Corp., Filinvest Development Corp., Sinophil Corp. and Wellex Industries which will be removed from the list. A total of 11 companies will be stricken off the property index including Belle Corp., Crown Equities Inc., Cebu Holdings Inc., Ever-Gotesco Resources & Holdings Inc., Fil-Estate Land Inc., Metro Pacific Inc., MRC Allied Industries, Inc., Philippine Estates Corp., Philippine Realty & Holdings Corp., Sta. Lucia Land, Inc., and Uniwide Holdings, Inc. After the changes, the property index will consist of 10 firms from the present 21. Meantime, Diversified Financial Network Inc., Island Information & Technology Inc. and Macroasia Corp. will no longer be part of the services index by May 4. The services index will total 17 firms by May 4 from the existing 20. Six companies will also be dropped from the mining & oil index namely Apex Mining Co. Inc., Abra Mining & Industrial Corp., Basic Energy Corp., Dizon Copper-Silver Mines, Inc., Semirara Mining Corp. and United Paragon Mining Corp., thus reducing the index to 12 companies from the present 18. Companies were removed from the sectoral indices due to their failure to meet liquidity and tradability requirements. - GMANews.TV (GMA Network Inc.’s online subsidiary, GMA New Media Inc., owns Media Merge Corp., which in turn, runs GMANews.TV.)