Stock Market Today

The Philippine market closed lower on Monday pulled down mainly by the stock of Philippines’ largest power distributor and after the U.S. markets’ Friday decline, analysts said.

The bellwether Philippine Stock Exchange index tumbled by 0.01 percent or 0.55 points to 2,819.48, while the all share index managed to add another 0.01 percent or 0.21 points to settle at 1, 790.41.

Trading was unusually high because of the special block sale of Southeast Asia’s food and beverage giant San Miguel Corp. which cornered 97 percent of the market’s value.

Stripping the swapping of San Miguel’s common to preferred shares, trading volume will stand only at 2 billion pesos (42.49 million U.S. dollars) or only a billion shares were exchanged.

Foreign buyers nonetheless managed to outsmart the sellers, leaving behind a net foreign buying of 70.69 million pesos (1.48 million U.S. dollars). More stocks slipped than gained 45 to 39 while 70 shares were unchanged.

Three of the six subsector indices managed to buck the trend. As expected, the industrial sector — where Manila Electric Co. ( Meralco) belongs, declined the most followed by holding firms and property stocks.

The rally in the shares of heavyweight Philippine Long Distance Telephone Co. meanwhile pulled up the service sector which closed at 1,442.73 or 0.62 percent higher. Mining and oil stocks and the financial sector also went up.

“The local equities [as expected] started the week on a soft soil, following the U.S. equities’ weak performance on Friday. Investors’ sentiment glided along with the overseas fund managers’ concerns on the rising unemployment in industrialized markets such as the US as well as ballooning fiscal deficit imbalances,” online local brokerage 2TradeAsia.com said in its daily stock market comment.

The Dow Jones industrial average — where the local market takes its guidance — again went down by another 0.23 percent or 21.61 points to 9,487.67. The Standard and Poor’s 500 index and the technology-heavy Nasdaq composite index also finished in the red. 2TradeAsia.com said investors paused to digest the latest string of events overseas. Locally, investors are checking for “relief signs” that business conditions have already normalized in the Philippines, given the series of typhoons that visited the country.

The local online brokerage however was quick to point that there are some things that investors can look forward to, starting with the benign inflation expectations for September which the local Central Bank estimated to stand between 0.1 percent to 0.9 percent to the strong performance of the local currency against the dollar.

“Despite recent ‘environmental challenges’, the Filipinos’ resilience to emerge from the rubble will come out strong in the end. Spending efforts to restore infrastructure and other capex initiatives will gain ground, as some brave players exercise ‘ cautious optimism’,” 2TradeAsia.coms said.

“Seasoned investors who move on signs of extreme pessimism are likely to seize buying windows this week, especially for stocks that are bound to be supported as soon as temporary concerns settle. While consumer spending progression concerns remain high, the financial system remains awash with investible funds that would help provide support for equities,” it added.

Stocks in the 30-company index closed mixed although it was Meralco — the country’s biggest power distributor — that was the biggest drag to the index. Shares of the company lost 4.04 percent or 7 pesos (0.14 U.S. dollar) to close at 166 pesos (3.52 U.S. dollars).

The stock however remains expensive despite going down from its recent high of 300 pesos (6.37 U.S. dollars) per share as it continues to trade at an estimated 36 times its price-to-earning ( P-E) ratio — higher than the local market’s 14x to 15x P-E ratio.

Analysts interviewed said they might downgrade Meralco as its revenue distribution network will likely go down following the two typhoons that hit the country, affecting most of its power lines.