In a pioneering move, Merchant Bank of Sri Lanka & Finance PLC (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 the Year 1999 is revised annually and looks at the Middle Range Market Capitalization, Liquidity and the Profitability of the firms to be included in the MBSL MIDCAP Index.
MBSL MIDCAP Index is used as the benchmark index by individuals 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. 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 in profitability helps to screen stocks with better future prospects that will cross to higher market capitalization in the coming year. MBSL MIDCAP Index which is in effect from January 1, 2019 and the criteria for selecting the 25 stocks of the index remained unchanged.
They are; Middle Range Market Capitalization as at November 30, 2018, Liquidity based on number of trades during the year and Profitability within the last two years.
When calculating the midcap index for the previous year (2018), stocks were selected from the market capitalization range of Rs. 2.38 billion to Rs.23.85 billion and with the changes of ASPI the midcap range is defined for the year 2019 as Rs. 2.24 billion to Rs. 22.39 billion.
Based on the above criteria the MBSL MIDCAP index 2019 includes the following stocks representing 09 sectors.
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