STRONGER foreign interest in Maynilad Water Services Inc. and Apex Mining Co. is expected following their inclusion in the MSCI Philippines Small Cap Index, analysts said on Thursday.
While the latest MSCI review left the MSCI Philippines Standard index unchanged, analysts said the spotlight was now on the two newly added small-cap constituents and potential impact on trading activity in these stocks.
Manny Ocampo, president and COO of Investment and Capital Corp. of the Philippines, said inclusion in the small-cap basket is typically viewed as an entry point for companies seeking eventual promotion to the main index.
“The small cap index is usually an entry point for companies not included in the index. They could then graduate to the main index,” he said, noting that more foreign funds are expected to begin covering and investing in the two stocks.
Equity Research analyst Shawn Ray Atienza echoed this view, emphasizing the solid prospects of the two companies even before the MSCI review.
“Given that Maynilad and Apex have solid prospects even prior to their inclusion in the MSCI Philippines Small Cap Index, we believe that this should further bolster participation on quality issues and could trickle down to the broader market,” he said.
Ras Mercado, head of research at Chinabank Securities, said the immediate effect would likely come from passive funds that track MSCI benchmarks.
“We think that the additions to the MSCI index provide a natural windfall to liquidity and foreign fund flows as index-tracker funds must have these stocks in their portfolio,” Mercado said.
Additionally, Mercado said MSCI inclusion would enhance global investor visibility, broaden the shareholder base and support more efficient price discovery.
Over time, he added, this could improve flexibility for future capital-raising initiatives, although sustained investor interest would still depend on fundamentals.
Analysts noted that MSCI index reviews often trigger portfolio adjustments from global funds that replicate the benchmark, resulting in increased trading volumes around the effective date.
For Maynilad and Apex Mining, the inclusion marks a potential turning point, not just in terms of short-term liquidity, but also in strengthening their profiles among institutional investors seeking exposure to Philippine equities.
Maynilad shares on Thursday rose P0.20, or 0.99 percent, to close at P20.35 each, while Apex Mining shares climbed P0.46, or 3.00 percent, to close at P15.80 each.