Meralco issue drags Philippine stock market down
Lopez-related issues dragged down the Philippine market on Friday but they stopped short of erasing the gains the market made throughout the week. The bellwether Philippine Stock Exchange index declined by 0.44 percent or 13.04 points to 2,931.47, while the all share index went down by 0.39 percent or 7.25 points to 1,839.46. Trading on Friday was above average where some 3.88 billion shares valuing P3.65 billion ($76.72 million) were exchanged. Foreign investors were net sellers at P66.6 million ($1.4 million). At home, two of the six subsector indices slipped. Manila Electric Co. (Meralco) pulled down industrial shares by 3.34 percent or 151.44 points to 4,374.64. The property sector also closed lower.
Mining and oil shares meanwhile was up by 1.96 percent or 184. 17 points to 9,571.05, along with the other three counters. Market breadth was positive where a total of 82 issues gained while 45 shares slipped and 52 stocks were unchanged. “Throughout the week, the local stock market was gripped by the stories of Meralco and Philex Mining Corp. Foreign and local economic data moved other stocks, but it was the movements of stocks related to the Meralco story that moved the composite index, ” Prince Anthony A. Yeung of AB Capital Securities, Inc. said. Yeung said the week-on-week appreciation in the value of Meralco, First Philippine Holdings Corp. and Philex were largely responsible for the week-on-week 0.79 percent gain of the index. It also helped that other companies reported positive nine-month profits, he said.
Meralco and Philex have been the subject of possible acquisitions by big groups. Shares of Meralco has continuously climbed for three days after the group headed by Henry Sy, Jr. offered to acquire the remaining stake of Lopez-led First Holdings in Meralco for P300 ($6.3) a share or above its market price. The Lopezes has opted to sell half of their 13.4 percent stake in Meralco to the local unit of Hong Kong-based First Pacific Co. Ltd. for P22.4 billion ($4.7 billion), matching the offer made by the son of the country’s richest man. Shares of mining company Philex, meanwhile, shot up on news that the Government Service Insurance System has been buying its shares from the open market. Philex posted a week-on-week gain of 13.50 pesos (0.28 US dollar) or 17.39 percent higher.
“The runup was accompanied by strong volumes as several groups are interested in the company. Aside from the government fund, First Pacific already has a significant bloc in Philex and is inclined to protect its interest,” Yeung said. “A group led by Roberto Ongpin has also been buying Philex shares. With different factions looking to increase their shareholdings, share prices of the mining company may stay high,” he added. But since the speculation over Meralco has already died down, the analyst said he expects the local stock market to move flat next week.
“Possible market movers include the US jobs data set for release later tonight, the aftereffects of the Meralco bidding war, and corporate earnings of a handful of index issues,” he said. Stocks in the 30-company index closed higher, led by heavyweight Philippine Long Distance Telephone Co. which climbed by 0.39 percent to P2,565 ($53.92).
