Stocks down sharply

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 $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 2 percent and 1.3 percent, respectively. These counters were weighed down most by BDO (down 6.95 percent to P60.95) and its parent conglomerate SM Investments (down 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- to 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 might have gone on Lenten vacation. “The buyers are no longer there but the sellers are still there,” Roxas said, explaining that the imbalance aggravated the day’s decline.