July 13 Philippine Stock Market Commentary

July 13 Philippine Stock Market Commentary

Now we are seeing a more meaningful decline in the Phisix, as the key Philippine benchmark took a breather down by .83% or 13.22 points.

As mentioned in our previous postings, after attempting to cross the 1,600 psychological threshold, the Philippine market as measured by the Phisix have palpably been stalling. The overall market’s bearishness replicated yesterday’s performance albeit on a more intensified scale; losers beat winners by 37 to 20 or almost 2 to 1 (fifth straight session), the industry indices were all down except for the Banking and Financial Index, foreign money registered a net P 12.830 million of outflows and lastly foreign money sold more companies than bought them.

The stepped up ‘correction’ saw more volume in terms of Peso turnover at P 673.493 million up 69.84% from yesterday’s volume although cross trades took up 50% of the total turnover. In short, net of cross trades today’s Peso volume added only P 65.987 million or 30.42%.

Among the Index heavyweights, PLDT the market’s sole pillar has finally gotten its required break, after plodding to take the Phisix past the 1,600 level. PLDT was lower 2.03% and was accompanied by declines in SM Primeholdings down 1.63%, Ayala Land and Ayala Corp both lower by 3.57%. The advances in the Banking and Finance index were primarily due to gains from BPI higher 2.4% and Metrobank up 1.85% whom were outnumbered and outperformed by the decliners. Meanwhile Globe Telecoms and the San Miguel local and foreign shares closed unchanged.

Foreign investors accounted for 57.04% of today’s trade. First Philippine Holdings and PLDT, accounted for the most of the net outflows, a variance from its routine with Ayala Land taking up the third spot. On the other hand, the gist of the inflows were registered among Bank of the Philippine Islands, Globe Telecoms, Ayala Corp and Union Cement.

Again the domestic performance mirrors that of the region’s activities. Most Asian bourses as of these writing are trading lower, 8 out of 15 bourses are in the red including our close neighbors Indonesia and Malaysia with Thailand among the minority trading slightly higher.

Today’s darling is no other than PLDT’s subsidiary PLTL on news that a recent share swap has brought SMART’s, PLDT’s major wireless subsidiary, interests in PLTL to 32.7%. PLTL gapped up and vaulted 10.3%.

Well there are varied analyses on the unfolding corporate developments in the Manny Pangilinan led companies. Of course, we have noted that the inherent culture of the Filipino mindset in investing is on the account of ‘stories’ investing, which makes Mr. Pangilinan’s companies very toothsome for investor plays. There are speculations that SMART, whom is required to be listed, will probably do a backdoor through PLTL. SMART has frequently issued a denial for the said intentions. However there are others who argue that the current ownership restructuring program of PLTL which would pave way for a shift of ownership from PLDT to SMART is for the purported NOLCO Net Operating Loss Carry Over of PLTL of which SMART would like to utilize for tax shield purposes. And this requires SMART to course some or most of its revenues to PLTL which would see an inflated bottom line or a ‘recovery’ story in short. But what of PLDT whose phenomenal growth is based mostly on SMART wireless revenues?

Another beneficiary of today’s activities is Metro Pacific (up 6.89%) another Pangilinan led company which is into shipping and real estate. The company has been riding on the coattails of PLTL’s climb, could another corporate prestidigitation be on hand?

DM Consunji’s 9.8% run today has been on streak since Semirara Mining Company announced of an ownership-restructuring program on June 16th of which DMC is the majority owner. DMC is now up 108% again on 'ownership restructuring tales'.

Finally the oil exploration companies saw another round of battering as the consortium at the Sulu Sea project have winded down operations in its second well. According to the final report issued by the Department of Energy “The operator likewise conducted wire-logging operations to determine the petrophysical properties of the drilled formation.” Case closed, wait for the next project, perhaps? Go Figure.