Buying Opportunity for MEG, and PGOLD

from Business Section - Philippine Inquirer:

MANILA, Philippines—Infrastructure holding firm Metro Pacific Investments has joined the closely tracked MSCI Philippines index, replacing conglomerate San Miguel Corp. effective May 31 this year.
MSCI also realigned the MSCI Global Small Cap Indices, with five new companies joining the index, all of which are not part of the main-share Philippine Stock Exchange index: D&L Industries, EEI Corp., Pepsi-Cola Products Philippines Corp., RFM Corp. and San Miguel Purefoods.

Deleted from the small cap index were GT Capital Holdings, Megaworld Corp., Puregold Price Club, Robinsons Land Corp. and Security Bank Corp.

Any adjustment in a country’s weight could be attributed to the dynamics of prices, number of shares, movement in prices and free float factor of component companies. A cap of foreign ownership also has an impact of reducing maximum amount of shares that investors can buy.

As such, whenever the level of foreign ownership gets too close to the threshhold such that it’s impossible to buy new shares, MCSI mitigates the effect by cutting the weight of that company in the index.

What does this mean?

MSCI is an index fund. Think of it as a mutual fund being whose stocks are composed of Philippine stocks. As stated above, MPI will be replacing SMC effective May 31. We might see an increase in MPI price in the short-term. Also joining the index are EEI, DNL, PIP, RFM and PF. These also might increase in the short-term. Let us wait and see if our target prices will be hit.

As for those removed from the index like GTCAP, MEG, PGOLD, RLC, and SECB, these stocks will likely go down in the short-term and that would be a great buying opportunity.

Of these stocks, MEG and PGOLD are on our list. PGOLD is a retail company, and MEG is in real estate. If you haven't already bought you're 3 focus stocks, I would suggest MEG.

Good luck, God bless, and as always, caveat!

~Crimson