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Big fuss over .02%

APC’s exclusion from the benchmark was decided on, however, after it missed by a few decimal points of the 20 percent float rule for stocks to be retained in the PSEi.

The Philippine Stock Exchange index is considered the gauge of the activity in the equities market and, by extension, of the economy since the direction of the line graph indicates the country’s financial health.

The index tracks the price movements of a basket of select companies listed on the bourse, representing various sectors of the economy. Investors and market participants use the PSE index as a reference to evaluate the performance of their investment portfolios and make informed investment decisions.

The daily movement of the index influences investor confidence and sentiment.

Increased investor confidence can stimulate trading activity, attract foreign investments, and encourage local companies to raise capital through initial public offerings or secondary floats.

A strong and stable PSE Index can enhance the stock market’s perception as an attractive investment destination. This could attract foreign capital inflows, increase liquidity, and contribute to developing the local capital market.

Thus, the impending exit of Metro Pacific Investments Corp., or MPIC, and Aboitiz Power Corp., or APC, from the Philippine Stock Exchange index seems a bit off as both companies are major players in the country’s growth story.

Replacing APC and MPIC in the exclusive blue chips club are tycoon Enrique Razon Jr.’s Bloomberry Resorts and the Po family’s Century Pacific Food.
The revamp takes effect on Tuesday, 26 September.

MPIC is stepping out of the index after its public float dropped to 2.78 percent as part of its program to delist by October.

APC’s exclusion from the benchmark was decided on, however, after it missed by a few decimal points of the 20 percent float rule for stocks to be retained in the PSEi.

The company purchased 11.4 million shares as part of its buyback program that brought the public float level to below 20 percent, the level required to stay in the PSEi.

Based on APC’s report to the market, stocks owned by the public are 19.98 percent of the total listed shares of 7.35 billion.

Listed companies are required to have a 10-percent public float, but the elite index members are given a more arduous 20-percent public ownership condition. APC is off by .02 percent.

APC’s buyback activities increased non-public scrips to 5.886 billion, bringing the total number of publicly owned shares to 1.47 billion.

“Aboitiz Power’s current public ownership levels far exceed the 10-percent minimum public ownership level required for it to remain listed in the Philippine Stock Exchange,” an APC statement to the PSE said.

“Even with this stock buyback program, there is no intention to delist from the PSE, but merely to reward our existing shareholders with a larger share of a brighter future,” APC added.

The PSEi must accurately reflect the stock market’s overall performance and, in the bigger picture, the economy’s strength.

Its composition should go beyond the mere technical criteria to allow a more representative indicator of the daily activity of the market.

APC accounts for one out of every five megawatts, or MW, of installed capacity in the country and has some 1,000 MW of renewable energy capacity in the pipeline.

In the first half of the year, the company reported a P17.8-billion net income, 79 percent higher than the P10 billion recorded in the same period a year ago.

In the second quarter, the company’s net income reached P10.3 billion, 46 percent higher than the P7 billion profit a year ago.

The decision to remove a key bourse participant, which also has among the most active shares, is like benching your star player because he forgot to bring a matching pair of socks.


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