Bourse axes SMC among index scrips

Diversifying food conglomerate San Miguel Corp., one of the country’s largest companies, will lose its slot in the Philippine Stock Exchange (PSE)’s index of top-30 listed companies, when the bourse revamps the composition of the index on Nov. 8.

Analysts worry that unilateral and frequent revisions of the composition of the index may put into doubt the accuracy of the bourse benchmark in tracking the true state of the local market.

The PSE in justifying its plan to remove SMC said its current ownership structure meant just 8.1 percent of shares in the company, now diversifying into heavy industries, were freely floated, and it would not qualify under a new free-float level of 10 percent, which is among the criteria to qualify for a slot in the index.

Two other issues, including broadcaster GMA Network and a medium-sized bank were also dropped from the 30 companies in the bourse’s composite index due to their lower market capitalization.

In their place will come construction, mining and property concern DMCI Holdings, power generation firm First Gen Corp. and JG Summit Holdings, a conglomerate and parent firm of newly listed budget carrier Cebu Pacific.

To qualify, the 30 companies must also have an average daily trading value of at least P5 million and be traded for at last 95 percent of the year’s trading days.

The PSE said the revision in the companies making up the index followed the conduct of a regular review of the indices.

The review covered trading activity for the period July 1 to June 30. All changes in the composition of the indices were based on the previously approved criteria.

To be included in the sector indices, companies must meet the liquidity or average daily trading value of at least P1 million and tradability of at least 75 percent of the total trading days requirements.

The PSE also said that it will update the free float level of all listed companies on Nov. 8, with adjustments based from the companies’ latest public ownership report as of June 30, 2010 submitted to the PSE.

It has also posted on its website the list of companies that will compose the PSEi and sector indices with their corresponding adjusted free float level while the free float level companies that are not members of the indices shall be posted on the corporate pages of the respective companies in the Web site. –Danessa O. Rivera, Daily Tribune