Biz Buzz: Fighting manipulation
Last Friday, PLDT was one of several index stocks (along with Ayala, BDO, BPI, First Holdings and Globe Telecom) that were heavily dumped during the projected closing period.
The selldown—by a government-owned broker, no less—trimmed almost P100 from the price of the telecommunications giant’s shares starting at 11:56 a.m. Strangely, this was merely a repeat of what happened the previous day where about P70 was lost off the share price toward the close of trading.
Was this heavy selling of PLDT last Thursday and Friday connected with the Digitel deal as claimed by market pundits? Or was it part of possible market manipulation moves by a foreign investor trying to make money on some over-the-counter equity derivatives, like what happened in the Korean stock market?
According to our source, the PSE’s Market Regulation Division was “clueless” on the matter and its surveillance system was not triggering alerts. Neither was the Securities and Exchange Commission aware of the anomaly (because it lacked a sophisticated surveillance system or market alerts protocol).
Sadly, the solution to suspected market manipulation moves is already available, one of which is Capital Markets Integrity Corp. of the local bourse (whose self-regulatory organization status from the SEC is still pending). The CMIC plans to introduce a projected closing detection test model used to great efficiency by its new partner, the Korea Exchange.
Of course, whatever anti-market manipulation method is ultimately chosen, our source tells us the PSE is asking (nay, begging) the SEC to fast-track the approval of CMIC’s SRO status so it can be empowered to crack the whip on erring brokers and traders.—Daxim L. Lucas
The Firm’s stars
Not that he’s in the running to become the country’s Ombudsman again, but former Ombudsman Simeon Marcelo was recently recognized—again—at the international level for his work in the fight against corruption.
No less than World Bank president Robert Zoellick, through managing director Sri Mulyani, extended an invitation to Marcelo to accept a three-year term as the multilateral development agency’s adviser on good governance and its anti-corruption efforts as part of its International Advisory Board (IAB).
This will be the second such term for Marcelo, who carved out a name for himself as a staunch opponent of corrupt state officials during—or should we say, in spite of—the previous administration.
Marcelo, of course, has maintained his advocacy against corruption after leaving public office and returning to the private sector as chief litigator of CVC Law, a.k.a. the Villaraza Cruz Marcelo Angangco law office, a.k.a. “The Firm.”
Recently, he led the widespread opposition to the controversial plea bargain deal involving retired Maj. Gen. Carlos Garcia and participated in congressional inquiries on the matter.
Also making waves back in The Firm is Marcelo’s deputy during his “stressful” government stint, John Balisnomo, who—along with Augusto San Pedro Jr.—scored win after win for the Bangko Sentral ng Pilipinas in the regulator’s legal battles with shuttered Banco Filipino.—Daxim L. Lucas
Spend money to make money
Philippine Airlines may be back in the black this year, but that doesn’t mean the flag carrier is about to start taking it easy.
Apart from its much-talked-about efforts to streamline its sometimes cumbersome cost structure inherited from its days as a government-owned firm, PAL is also trying to improve its revenue profile.
One particular area of interest for the airline is its lucrative trans-Pacific route which, according to our source, accounts for the biggest share of PAL’s revenue pie, but also has some of the slimmest profit margins.
To improve this, PAL not only needs to fly more passengers but it has to be able to do this more efficiently by using its brand-new Boeing 777 jets for its Manila-Los Angeles and Manila-San Francisco services (something currently prohibited by US government “Category 2” restrictions).
So PAL isn’t sitting around while waiting for this elusive upgrade to Category 1. In fact, PAL began last month paying for the services of a world-renowned aviation consultant, Tim Neel, whose specialty is getting downgraded countries upgraded to Category 1 status.
No, Tim Neel isn’t advising PAL, as the airline has always been up to par with international standards. The airline is paying him solely to help the government-run Civil Aviation Authority of the Philippines. That’s how important this is for PAL’s sustained profitability.—Daxim L. Lucas
Wealth on SMC
Sure, San Miguel Corp.’s undervalued stock was praised recently by a throng of stockbrokers and investment banks that served as underwriters during its $900-million equity issue. But is anyone outside of this group echoing their buy recommendations?
As a matter of fact, there is a growing number of them. One such buy recommendation on the diversified conglomerate came recently from influential local stockbroker Wealth Securities, which put a “buy” rating on SMC’s stock, with a target price of P165 a share.
So what’s so special about the study? Well, for one, it provides a visual representation of the group’s new corporate structure—something many people have wanted to see for sometime now—in a neat organizational chart layout. It shows not a tangled web of ownership and cross-ownership, but a neat set of lines that clearly divide the firm’s core businesses from its new (and more exciting) undertakings.
The in-demand study (hard to find a copy nowadays, we’re told) puts SMC side by side with listed rival Metro Pacific Investments Corp. and shows the former outpacing the latter in terms of return on average equity, 15 percent to 7.9 percent, respectively.
And to what does SMC owe this high rate of return? Wealth Securities narrows it down to a single factor: Conglomerate president and COO Ramon Ang. ‘Nuff said.—Daxim L. Lucas
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