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Recommendation
The PSE announced last Friday the results of its review of the widely followed PSE index (PSEi). As widely anticipated by the market, Megaworld Corporation (MEG) and Robinsons Land Corporation (RLC) will be replaced by DMCI Holdings, Inc. (DMC) and Union Bank of the Philippines (UBP) by February 6. These changes will be carried out on Friday, February 4, 2023.
Our recommendation: Buy ??? and sell ???.
Interestingly, what we have seen since 2020 is that the PSE index additions have… Meanwhile in the succeeding weeks, the other stocks further rose in price, peaking at 27% upside after around 120 days.
How the stocks fared throughout the next 228 days (approximately 1 year after effectivity) can be seen in the following table.
| Stocks added to PSEi | Stocks deleted from PSEi | |
| Effectivity day | -5% | 5% |
| 30 days after | Upgrade to | Premium Access |
| 60 days after | ??? | ??? |
| 120 days after | to view | full stock reports |
| 180 days after | ??? | ??? |
| 228 days after | -??? | ??? |
Data shows that stocks added to the PSEi saw price reductions, declining by 5% on effectivity date and …
For the February 2023 rebalancing, implementation day is on Friday, February 4, 2023. Based on the last 5 rebalancings, a holding period of … appears to be the optimal holding period that maximizes the return on this strategy.
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