Shares of beleaguered Manila Water Co. Inc. (MWC) rebounded for the first time in 12 trading days on Wednesday as the government’s rhetoric changed to renegotiation from the previous threat of outright revocation of contract.
Shares of MWC rebounded by 14.17 percent while shares of Metro Pacific Investments Corp. (MPIC) and DMCI Holdings, the key shareholders of Maynilad Water Services Inc., also both rose by more than 9 percent.
“There’s some relief as the government said the concessionaires won’t be replaced,” a veteran broker said.After President Duterte earlier threatened to revoke the water contracts, the departments of Finance and of Justice are now saying that they would only renegotiate for better terms. “I think the government realized the damage done to SSS (Social Security System) and GSIS (Government Service Insurance System) due to the decline in price of Ayala Corp., DMCI, MPIC and MWC,” the broker said.
It was earlier reported that the state-run pension funds had suffered about P4 billion in reduced market valuation
of equity position amid the water row.At its closing price of P6.85 a share, MWC is now trading above its P6.50 initial public offering price in 2005. However, it is still down by nearly 64 percent from its closing price of P18.98 a share on Dec. 2, or before Mr. Duterte ranted against the water concessionaires.
Overall, the main-share Philippine Stock Exchange index (PSEi) ended 3.22 points, or 0.04 percent, higher to close at 7,733.67. However, foreigners remained net sellers, resulting in a net outflow of about P1 billion for the day.
“The PSEi is barely staying above the 7,700 support level as foreign investors continue to exit our market. Trading volumes have picked up this week although it may have more to do with the volatility in the companies involved with our water concessionaires rather than investors trying to get in before the holidays. We may see it continue to lower toward the end of the week,” said Christopher Mangun, head of research at local stock brokerage AAA Equities.