Union Bank getting kicked out of PSEi on October 4

The PSE announced that Union Bank [UBP 70.70, up 0.0%; 33% avgVol] [link] will be removed from the PSEi, effective October 4, due to the reclassification of the SSS’s stake in UBP from public to non-public. The reclassification will cause UBP’s public float to fall below the 20% threshold needed to maintain membership in the PSEi. The PSE clarified that this will only affect UBP’s membership in the PSEi; UBP’s float is still above the 10% required to remain listed for open trading on the PSE. Nickel Asia [NIKL 5.40, up 0.0%; 114% avgVol] will replace UBP in the PSEi.

MB bottom-line: SSS has almost a 10% stake in UBP and two board seats, and under the old rules, so long as that stake was below 10%, the shares were considered “public”. Now, the new rules focus more on the intent of the investor, and UBP’s influence and control over the company by way of its presence on UBP’s board tip the balance of factors in favor of considering the shares as non-public. The PSE sent the rule change out for comment two months ago on August 25, but (as far as I can tell) has not provided follow-up guidance on the result of that comment period or a timeline for the implementation of the proposed changes. Maybe it’s just something that I missed, but if someone like me (who lives to consume disclosures like a madman) missed the announcement, how can we expect the general public to have the kind of notice needed for this to not seem like a random surprise? The rule change is good as it brings us more in line with our ASEAN neighbors, but the lack of communication is at the heart of the investing public’s generally negative response to this. Feels like an unforced error.

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