PSEi slumps sharply, led by BDO, SM

MANILA, Philippines—The local stock index slumped sharply on Tuesday, weighed down by tycoon Henry Sy-led companies after the group’s banking arm Banco de Oro announced a hefty $1-billion stock rights offering.

The main-share Philippine Stock Exchange index shed 54.38 points or 1.06 percent to finish at 5,056.48.

All counters were in the red but the steepest decline was posted by the financial and holding firm counters which fell by 2 percent and 1.3 percent, respectively.  These counters were in turn weighed down most by BDO (-6.95 percent to P60.95) and its parent conglomerate SM Investments (-5.9 percent to P640).

“In general, investors do not like rights offer unless at deep discounts,” said Joseph Roxas, president of Eagle Equities Inc.

Based on an earlier disclosure, BDO’s rights offer would be set at a 20-25 percent discount to market.  The bank plans to give existing investors the right to buy one new BDO share for every three shares held.

At the same time, Roxas said many investors were already in a holiday mode or may have already gone on Lenten vacation. “The buyers are no longer there but the sellers are still there,” Roxas said, explaining that this imbalance thus aggravated the day’s decline.

Value turnover amounted to P5.28 billion which was still lower than the average daily trading volume of P7.85 billion in the first quarter.

There were 75 stocks that gained while 91 declined while 44 stocks were unchanged.

PLDT, SM Prime and SMC also contributed to the PSEi’s decline on Tuesday. Cebu Holdings, which had risen sharply in previous weeks, also declined in heavy trade.

On the other hand, the PSEi’s slide was curbed by the gains of MPI, DMCI, AC, AGI, AP, RLC and ICTSI.  Puregold and Philodrill also gained in heavy trade.

Puregold rebounded by 4.8 percent after submitting to PSE a comprehensive disclosure on its acquisition of affiliate retailer S&R Membership Shopping.