UNION BANK of the Philippines (UnionBank) was the most actively traded stock last week after the announcement of the bank’s removal from the Philippine Stock Exchange index (PSEi) eight months into its re-entry.
Data from the PSE showed UnionBank ranked first in value turnover with P2.49 billion worth of 38.83 million shares changing hands from Oct. 2 to 6.
The Aboitiz-led bank’s shares finished at P66.55 apiece on Friday, rising by 3.2% from its P64.50 close on Sept. 29. For the year, the stock declined 22.6%.
Arielle Anne D. Santos, equity analyst at Regina Capital Development Corp., said in an e-mail that UnionBank became one of the most traded stocks last week due to the PSE announcement of its removal from the 30-member PSEi after rules on government pension funds’ holdings were revised.
“UnionBank turned out to be one of the most active stocks last week primarily because of its removal from the index, as usually, tracker funds have to recalibrate their portfolio composition to reflect the changes in the index,” Ms. Santos said.
“I think the market’s reaction was not unexpected. They know for a fact that UnionBank would go down for its removal from the index and nothing else,” Ms. Santos, adding that the bank has sound fundamentals, “that is why bargain hunters took advantage of the plunge.”
The bank’s stock fell to P61.80 from P64.50 on the first trading day last week.
The PSE announced that effective Oct. 4, UnionBank will be removed from the PSEi due to the reclassification of the Social Security System’s (SSS) stake in UnionBank from public to nonpublic.
SSS owns nearly 10% of UnionBank, with two directors sitting on the bank’s board. When SSS shares were classified as nonpublic, the public float of UnionBank dropped below 20%, which is the minimum amount required for PSEi inclusion.
The PSE noted that this will only affect UnionBank’s membership in the PSEi because UnionBank’s float is still above the 10% required to stay listed for PSE trading.
On Aug. 25, the PSE proposed new rules that shares held by pension funds, which are usually classified as public shareholdings below a certain proportion, will be reclassified as nonpublic if the fund has a board seat in the company.
The classification is needed in calculating the public float or the portion of a listed firm’s shares that can be openly traded by the public and are not owned by insiders such as major stockholders, directors, or officers.
The PSE also said that UnionBank will also be excluded in the PSE dividend yield and financial subindices.
“UnionBank was speculated to be removed from the index next year but everyone was surprised when the PSE announced it sooner,” Jeff Radley C. See, an analyst at Mercantile Securities Corp., said in a Viber message.
He said the removal of Aboitiz Power Corp. from the index hinted to investors that UnionBank might be the next due to its low-value turnover.
AboitizPower was removed from the PSEi on Sept. 26 after it fell below the 20% minimum free float requirement.
In the first semester, UnionBank’s net income reached P6.42 billion, a 6% increase from the P6.06-billion profit recorded in the same period last year.
Its revenues rose by 76.3% to P36.47 billion from P20.69 billion in the same period in 2022.
“Based on its first half performance, its 2023 estimate top line could almost double its 2022 actual print,” said Ms. Santos.
Ms. Santos pegged the stock’s support at P59.75 per share and its resistance at P68.50 each.
Mr. See gave a support level of P60 apiece and a resistance level of P70.00 to P75.00. — Lourdes O. Pilar
