Union Bank and DMCI May Be Added to the PSEi
Aboitiz-led Union Bank of the Philippines (UBP) and Consunji-led DMCI Holdings, Inc. (DMC) may be added to the Philippine Stock Exchange Index (PSEi) in its upcoming rebalancing this February 2023. Based on our in-house snap simulations, they show that the smallest companies in terms of full market capitalization among the 30 index names are Megaworld Corporation (MEG), Robinsons Land Corporation (RLC), and Puregold Price Club, Inc. (PGOLD). Outside of the PSEi, the ones that have the largest full market capitalization are UBP, DMC, and Bloomberry Resorts Corporation (BLOOM) with the first two already eclipsing the market caps of MEG and RLC as of January 6, 2023. In terms of free float market capitalization, the smallest companies among the current index names are MEG, RLC, and LT Group, Inc. (LTG) with UBP, DMC, and Security Bank Corporation (SECB) already surpassing the former’s free float market caps. The common names that may possibly be removed based on full market capitalization and free-float market capitalization are MEG and RLC. Meanwhile, the common names that may possibly be added based on the above criteria are UBP and DMC. But since UBP and DMC have a combined free float market capitalization of Php105.71 billion which is more than twice of that of the combined free float market capitalization of MEG and RLC of only Php49.35 billion, if UBP and DMC replace MEG and RLC then we can expect more selling in the other index names as well (downside adjustment in their weights) to compensate for the addition of the bigger UBP and DMC.
Update: Note that the changes on the PSEi (UBP and DMC to replace MEG and RLC, as expected) was announced at the close of January 27. The said changes will be effective on the start of February 6 (with the actual rebalancing taking place near the close of February 3).
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*Consensus target price or average target price given by the major foreign and local brokers of various stocks on top of index names are available in our Equity Advisor!
