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SM Prime’s PSEi weighting increased

Posted on October 29, 2013 10:36:56 PM [ BusinessWorld Online ]

SHOPPING center builder and operator SM Prime Holdings, Inc. will now have a stronger impact on the movement of the Philippine Stock Exchange index (PSEi) after it merged with SM Land, Inc., the bourse said yesterday.

“The exchange would like to clarify to the investing public that the increase in the index weight of SM Prime, which happened on Oct. 25, was a result of the increase in outstanding shares of SM Prime that took effect on the same day pursuant to its merger with SM Land,” PSE said in a memorandum.

No adjustment was made to the free float level of the company in the 30-stock index, it noted.

PSE officials were not immediately available for details on the firm’s new standing in the main index. But according to Abbygayle M. Estrella, analyst at AB Capital Securities, Inc., SM Prime had a weight of 5.67% as of yesterday, up from 3.3%.

This means the Sy-led company will enjoy a stronger command over the benchmark index’s movement and thus, have a bigger allocation from investment houses.

“This would mean adjustments from fund managers so that their current portfolios will reflect the main index,” Ms. Estrella explained.

“That’s the main reason why SM Prime’s shares surged last Friday.”

Stocks of SM Prime jumped 15.86% to P19.58 apiece last Friday, before they corrected yesterday to P18.50, down by 5.52%. Trading was suspended on Monday to make way for the barangay elections.

The Securities and Exchange Commission early this month cleared the merger of SM Prime and SM Land, with the former as the surviving entity.

The mall operator is set to acquire other assets of SM Group, such as hotels and convention centers, as part of the consolidation process that will make SM Prime the property holding firm of the country’s richest family.

Once the consolidation is completed, SM Prime is expected to become the biggest property firm in Southeast Asia in terms of market capitalization, which is forecast to balloon to around P560 billion from about P338 billion. -- Cliff Harvey C. Venzon      
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