The Philippine Stock Exchange (PSE) is again making some changes in its indices starting Feb. 5, 2024, while amending its rules to clarify when stakes of pension funds in public companies are no longer part of the public float.
The benchmark 30-stock PSE index and sectoral indices will remain the same but there will be some movement in the PSE Dividend Yield index (PSE DivY) and PSE Midcap indices based on the results of the regular review of the PSEi and other indices covering trading activity for the period January to December 2023.
For the PSE MidCap index, Filinvest REIT Corporation will be removed and will be replaced by Petron Corporation while the PSE DivY index will see the exit of Aboitiz Equity Ventures Inc. and GMA Network with China Banking Corporation and Synergy Grid & Development Philippines Inc. taking over their slots.
Meanwhile, the PSE said it is amending a section of its Policy on Index Management to provide more clarity regarding the shares held by pension funds for strategic purposes.
“In determining a company’s free float, its outstanding shares shall be adjusted to exclude shares classified as being held strategically," said PSE.
To be viewed as strategic in nature and are deducted from the outstanding shares are those held by pension funds and government-run social security funds Social Security System and Government Service Insurance System.
While shares held by the SSS and GSIS are generally considered free float, the amended rules say that, “if the fund has a board seat in the company, the shares shall be treated as non-free float.” This amendment will take effect immediately.
The need to clarify this arose when the GSIS acquired enough shares for a board seat of Metro Pacific Investments Corporation (MPIC) at a time when the company’s free float level was being mopped up via a tender offer in preparation for voluntary delisting.
However, the GSIS brought its ownership in MPIC to 3.44 billion shares or 11.98 percent and, if these are considered part of the free float, would have stood in the way of the voluntary delisting as the free float level will still remain above the 10 percent minimum public ownership required.
To fix the dilemma, the GSIS said it intended to remain a shareholder of the conglomerate even if it is delisted. Since it owns more than 10 percent of the outstanding common shares of MPIC, pursuant to the Rule on Minimum Public Ownership, its shares in MPIC are now considered as non-public shares.