From AB Capital's The Opening Bell: Three Moves
Event
Maynilad Water Services Inc. (MYNLD) will replace Converge ICT Solutions Inc. (CNVRG) in the Philippine Stock Exchange index (PSEi) effective Aug. 3 after qualifying for early inclusion based on market capitalization and liquidity. CNVRG will move to the MidCap Index, while Aboitiz Equity Ventures (AEV) joins the Dividend Yield Index following the latest review.
View
We think the inclusion confirms strong institutional demand and improves MYNLD's visibility among passive and benchmark-aware investors. CNVRG's removal appears primarily index-driven rather than fundamental, although near-term sentiment may weaken as funds rebalance exposure toward the incoming constituent.
Catalyst
The immediate catalyst is the Aug. 3 implementation, which could generate closing-auction volatility and passive fund flows. The February 2027 review will apply stricter minimum trading activity requirement (MTAR) and median average daily value turnover (MADV) tests, making sustained liquidity increasingly important for both MYNLD's retention and CNVRG's potential return.
Action
In our view, MYNLD remains the tactical beneficiary, although we would avoid chasing after its strong post-IPO performance and prefer accumulating on pullbacks. For CNVRG, index-related selling could create an entry opportunity if operating momentum and valuation remain supportive after the rebalance.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.