BIZ BUZZ: PSEi entry: A toss-up between PLUS and RCR?
The Philippine Stock Exchange (PSE) must be torn between the devil and the deep blue sea as far as the next rebalancing of its main stock barometer is concerned.
For the first time in the history of the local bourse, a company that the market had widely expected to enter the PSE index (PSEi) saw a sudden reversal of fortune shortly after the rebalancing review cutoff.
At its peak in early June, online gaming leader Digiplus Interactive Corp. commanded a market capitalization of P276 billion—much bigger than those of brick-and-mortar casino operators, some property developers or even banks.
Previously, there was no doubt among stock market pundits that DigiPlus, which trades under the ticker PLUS, had met all the PSEi eligibility requirements, such as free float and liquidity during the last 12-month review.
Everyone was sure that PLUS would replace Bloomberry Resorts Corp. in the 30-member blue chip basket.
Then came the unexpected free fall amid calls by lawmakers and policymakers for tighter regulations or even worse, a total online gaming ban.
For the month of July alone, as these regulatory risks came to the public mind, PLUS shares have fallen by P32 to just P20 per share. Market capitalization slid to P102 billion, despite a P6-billion stock buyback.
Stock analysts now raise the possibility that there won’t be any PLUS to be added to the PSEi.
Some say the PSE may invoke provision 3.2.1. in its Policy on Index Management under the Rules for Insertion and Removals.
It states: “The rules for additions and removals during the semiannual review are designed to provide stability in the selection of constituents of the PSE indices and at the same time to ensure that the indices are representative of the market by including and/or excluding those companies which have risen or fallen significantly.”
If and when PLUS misses this window, all eyes are on RL Commercial REIT Inc. (RCR) to make the cut instead.
RCR prices have already spiked in recent days on hopes it may debut on the PSEi sooner than originally anticipated.
Expected to become the largest real estate investment trust in the country, RCR is valued by the stock market at P122.57 billion, now eclipsing the valuation of PLUS.
Whether the former stock market darling is in or out, we’ll find out in the coming days. Whatever its decision will be, the PSE must carefully explain the basis.
