PSE main index drops San Miguel


Posted at Oct 28 2010 07:52 PM | Updated as of Nov 04 2010 09:17 AM

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. would be dropped from the basket of 30-member bellwhether stocks of the Philippine Stock Exchange.

In a memo to investors, the local bourse attached the new composition of the PSE main index (PSEi) and sectoral indices that will take effect on November 8.

Early this year, the PSE released 5 criteria that need to be met by listed firms to make it to the index of the country's most traded, most liquid and well-capitalized listed firms.

San Miguel did not qualify since its current ownership structure showed that the public investors can only trade common shares equivalent to 8.1% of total.

The PSE required a minimum free-float level, or tradeable common shares, of 10%.

San Miguel has been diversifying away from its stable food and drinks business, and into potentially high growth sectors like power generation and distribution, oil refinery and retail, mining, telecommunications, and infrastructure.

The news of its exclusion from the PSEi came a day after the San Miguel stock soared 12% on October 27, its highest single-day spike, observed the Financial Times.

The spike was largely a result of heavy buying by Winston Garcia, a member of San Miguel's board and Arroyo-era head of the state pension fund Government Service Insurance System.

Spikes caused by trades of a single market player proved how San Miguel's low level of free float can result a in volatile stock price.

San Miguel, one of the country's largest conglomerates, is now controlled by groups connected to Marcos-era trade secretary Roberto Ongpin and company president Ramon Ang. In the first half of 2010, San Miguel bought a controlling stake in Top Frontier.

Behind Top Frontier are Ongpin and condiments businessman Joselito Campos who have entered into an exclusive agreement to acquire a controlling stake in San Miguel.

Businessman and political kingmaker Eduardo "Danding" Cojuangco Jr., who used to be at the helm of the company, has already sold out after the Supreme Court agreed to convert the San Miguel shares being claimed by coconut farmers into non-voting shares.

Joining San Miguel in getting the boot are broadcasting firm GMA Network and medium-sized Security Bank.

Replacing them in the PSEi are construction firm DMCI Holdings, power generation firm First Gen Corp., and diversified conglomerate JG Summit Holdings.

Philippine share prices have soaring to record highs in the past weeks.