UnionBank of the Philippines (UBP) almost made it to the PSE index (PSEi) during the August 2022 rebalancing, if only it was more active on 1 of the 12 months under review. The February 2023 rebalancing is just a few weeks away and UBP is widely anticipated to make it to the PSEi this time.<\/p>\n\n\n\n
Also just last week, UBP firmed up the price for its Stock Rights Offering (SRO) at Php 56.88\/share which was determined by getting the 15-day volume weighted average price of the stock before further reducing it by 30%. (See also: UBP stock rights offer (SRO) could yield mere 1.2% upside to current prices<\/a>)<\/p>\n\n\n\n Existing shareholders will be entitled to subscribe to 10.1536 Rights Shares for every 1 common share held. The ex-rights date is on January 9, Monday, which means today is your last day to buy if you want to participate in this capital raising exercise.<\/p>\n\n\n\n We estimate that approximately 18 million shares will need to be bought by passive funds on the day of implementation and this is equivalent to 75 days\u2019 worth of turnover based on UBP\u2019s 20-day average volume. <\/p>\n\n\n\n If this pans out, then investors participating in the SRO can take advantage of this arbitrage-like opportunity by selling their rights shares (bought at Php 56.88\/share) if and when UBP is indeed added to the PSEi in February 2023.<\/p>\n\n\n\n The downside to this strategy is if UBP does not get included during the February rebalancing, thus requiring a longer holding period for this tactical position. <\/p>\n\n\n\nAnalysis and Recommendation<\/h2>\n\n\n\n