Debuts and switcheroos: Developments obscuring PSEi’s path to 7,000

The stock barometer is expected to continue shying away from the 7,000 territory this week as some investors prepare for upcoming public offerings, while others may pocket gains from the past three quarters.

Last week, the main-share Philippine Stock Exchange index (PSEi) shed 0.24 percent, closing at 6,906.86 as investors priced in upcoming changes to the main index alongside the sell-off on index newbie Converge.

Effective today, Wilcon Depot will join the PSEi, replacing First Gen.

Meanwhile, the 365-day lock-up period on shares of global private equity firm Warburg Pincus LLC, which owns 15.8 percent of fiber internet company Converge, expired on Friday. As such, the market is bracing for the possibility that Warburg may sell all or part of its stake.

Joseph Roxas, president of Eagle Equities, also said there would be two events that could affect market liquidity this week: first is the upcoming initial public offering of AllDay and the release of funds paid for the tender offer for First Gen.Roxas believed these two events would offset each other as far as the liquidity impact was concerned.

It’s also the time of the year when many fund managers pare their holdings to book gains for the year, according to Roxas.

Villar-led AllDay is offering as much as P6 billion worth of shares from Oct. 18 to 25. It will bring to the market up to 6.86 billion primary shares and up to 685.71 million overallotment option shares at a price of up to 80 centavos per share. The final offer price will be determined tomorrow, Oct. 12, after the book-building process.

On the other hand, Roxas said Wilcon could still see active trading with its debut on the index. This home improvement company had been the market’s most actively traded company in the last two sessions since the PSE announced its entry into the PSEi.

“There’s some more room for Wilcon to go up,” he said, noting that this company still had a very low level of foreign ownership to date.

BDO Unibank chief strategist Jonathan Ravelas said investors also remained cautious ahead of the key US jobs report.

“The week’s close at 6,906.86 highlights continued consolidation within the 6,700 to 7,000 levels. But be on the lookout: should the 6,700 levels give way, the next key support is at 6,300 levels,” he said. INQ