The MSCI Philippine Index is developed and monitored by Morgan Stanley Capital International (MSCI) Inc., a global provider of investment decision support tools. According to their official website, more than 7,500 institutional clients around the world use their tools as guide in managing investment portfolios.
In the past, changes in the constituents of the MSCI Philippines Index, or any other MSCI indices for that matter, would cause movements in a company’s stock price when the rebalancing of a fund portfolio is underway.
For example, if a stock’s weight was adjusted and reduced in the index, global fund managers following the index would have to sell their holdings of that company’s stock in order for their funds to mimic the index. Typically a decline in stock price would occur because of the sell-off.
Similarly, if the MSCI Index gave more weight to a stock, one can generally expect an uptick in price of that stock due to the buying spree. In the Philippines, stock price fluctuations do occur whenever the composition and weighting of the MSCI Philippines Index are changed.
Here’s the updated composition of the MSCI Philippines index as of May 2014, taking effect on June 2, 2014.
Top 10 Constituents of the MSCI Philippines Index
|Company||Stock Code||Index Weight (%), effective June 2014||Index Weight (%), effective May 2014||Nominal Change in Weight|
|Ayala Land Inc.||ALI||9.88%||10.29%||-0.41%|
|Universal Robina Corp||URC||7.56%||7.68%||-0.12%|
|Banco de Oro||BDO||7.36%||7.62%||-0.26%|
|SM Investments Corp.||SM||7.27%||6.27%||1.00%|
|JG Summit Holdings||JGS||7.04%||7.50%||-0.46%|
|SM Prime Holdings||SMPH||6.46%||5.99%||0.47%|
|Aboitiz Equity Ventures||AEV||6.09%||6.60%||-0.51%|
|Jollibee Foods Corp.||JFC||4.38%||4.37%||0.01%|
Compared to the composition in April 2014, the following three companies were given more weight in the MSCI Philippines Index as of the end of May 2014: SM Investments Corp. (SM; up 1%), SM Prime Holdings (SMPH; up 0.47%) and Jollibee Foods Corp. (JFC; up 0.01%). The recomposition could partly explain why the stock prices of SM and SMPH were rising in the past days.
Meanwhile, the stock prices of ALI, TEL, JGS and AEV have been declining in the past week, perhaps as a response to the reduction in weights in the MSCI index.
About the MSCI Philippines Index
The MSCI Philippines Index is a basket of 19 PSE-listed stocks that “measures the performance of the large and mid cap segments of the Philippine market,” as per the MSCI website. The index supposedly covers “about 85%” of the entire Philippine stock universe.
Previously we compared the performance of the MSCI Philippines Index versus the annual performance of the PSEi. In our post PSEi vs. Philippines MSCI Index Performance, it can be seen that the MSCI Index is able to outperform the PSEi. This perhaps explains why thousands of investment fund managers around the world subscribe to and follow the MSCI index proposed stock composition.
The MSCI Philippines Index is reviewed and revised, if needed, four times in a year — in February, May, August and November.
We will again revisit the MSCI Philippines Index composition and post the changes here once we get updates on the index rebalancing.
Must read other interesting articles:
- PSEi vs. Philippines MSCI Index Performance
- Top 10 MSCI Philippines Index constituents (February 2014)
- MSCI Philippines Index composition (August 2013)
- Composition of the Philippine Stock Exchange index (PSEi)