MWSS water rate cut order ends stock market rally
MANILA, Philippines—The local stock market’s four-day rally ended on Thursday after a government order to cut water tariffs weighed down on large companies with investments in private water concessionaires.
The main-share Philippine Stock Exchange index rose in early session but swung to negative territory after an order from the Metropolitan Waterworks and Sewerage System (MWSS) on rate rebasing came out. Profit-taking pressures likewise started to gnaw at regional markets.
Joseph Roxas, president of Eagle Equities Inc., said the MWSS rate rebasing order had a big impact on the PSEi because a handful of index stocks were invested in affected private water concessionaires.
Maynilad Water’s controlling stockholders MPIC (7.84 percent) was the day’s biggest PSEi decliner while its partner DMCI (-4.44 percent) likewise tumbled after Maynilad and MWC were ordered to cut water tariffs for the next five years. MWC shares fell by 3.58 percent while parent Ayala lost 1.92 percent of stock value.
Both Maynilad and MWC have opposed the MWSS order and announced plans to seek arbitration.
Separately, Philex Mining likewise fell sharply (-7.69 percent) as the mining firm unveiled plans to issue new shares at a discount. Philex plans to register up to P13.8 billion worth of common shares with a par value of P1 per share which will be offered by way of stock rights offering.
Philiex’s decline dragged the mining/oil counter (-1.67 percent). The financial, industrial and property counters likewise slipped. On the other hand, holding firms and services posted modest gains.
There were 66 advancers against 78 decliners at the local market.
Turnover amounted to P8.16 billion.
Roxas said the market’s rise in the past four days meant that the jitters over Syria have abated as the likelihood of a US military strike against Syria diminished. But Roxas noted that the US Federal Reserve’s tapering of easy money stimulus had yet to be discounted.
“Until the first tapering has happened, it won’t be digested. This issue will come back like a recurring nightmare,” Roxas said.
The Federal Open Market Committee is set to meet next week, after which it is widely expected to unveil tapering plans.