MBSL announces new Midcap Index composition for 2014
Thursday, 2 January 2014 00:00
In a pioneering move, MBSL constructed a stock market index, the MBSL Midcap Index, which measures the aggregate price level and price movements of medium size companies listed on the Colombo Stock Exchange (CSE).
The index which came into operation in 1999 is revised annually and looks at the middle range market capitalisation, liquidity and the profitability of the firms to be included in the MBSL Midcap Index. The MBSL Midcap Index has the base as 1,000 as at 31 December 1998 (which is the same base year for Milanka Index) whilst it has rose to 7,225.49 by 30 December 2013.
The new S&P SL20 provided an alternative to the Milanka Price Index (MPI) which is not being applied from 2013; MBSL MIDCAP Index will facilitate investors who seek for a return index of medium sized companies listed on the CSE.
Benefits of the MBSL Midcap Index
The MBSL Midcap Index can be used as the benchmark index by individual and institutional investors who prefer growth but are prepared to with stand only conservative levels of volatility in their equity investments.
It can be used as the benchmark index for the introduction of MBSL Midcap linked index funds.
The MBSL Midcap Index generate valuable signals for portfolio managers for switching from larger-cap more sensitive stocks to midcap less sensitive stocks with more growth potential in response to changing capital market conditions. The MBSL Midcap Index focus on profitability helps to screen stocks with better future prospects that will cross to higher market capitalisation in the next year.
For the MBSL Midcap Index which is in effect from 1 January 2014 the criteria for selecting the 25 stocks of the index remained unchanged. They are:
A. Middle Range Market Capitalization as at 30 November 2013.
B. Liquidity based on number of trades during the year.
C. Profitability within the last two years.
The range for market capitalisation for the year 2012 was Rs. 1.99 b-Rs. 19.91 b. With the stock market movements, this range is adjusted for the change in the ASPI annually. Accordingly the range of market capitalisation for 2013 will be Rs. 2.15 b-Rs. 21.49 b.
Based on the above criteria the MBSL Midcap index 2014 includes the following stock representing eight sectors.