Call it like you see it
This seems to best describe the market last week: it was a non-event, an uneventful market, or, better still, it was outrageously anything that it was.
On a weekly basis, the market went down further by another 56.54 points, or 0.01 percent, at 5,206.81 as compared to the previous week’s closing of 5,263.35. Considering the one-day trading session suspension on Tuesday the week before due to Typhoon Gener, it appeared that the market attempted to make up for lost opportunities.
The attempt, however, obviously did not have the strength to support an effective rebound. This explains why on Thursday and Friday, the market’s latent weakness prevailed and posted all of its trading losses for the week.
With whatever you may want to call or describe the market’s performance last week, it may have been affected as well by the Chinese ghost month that officially started in the Philippines last Friday.
MSCI (All Country) Pacific index
Another big factor that may have taken away the better of the market last week was that on Thursday, MSCI Inc. released a new bulletin on the changes in the weights it had previously assigned to measure the performance of member markets, which in turn affected investors’ outlook on the stocks that made up said index.
Among others, negatively affected in our case were Metropolitan Bank and Trust Co. (MBT), Globe Telecom Inc. (GLO), Jollibee Foods Corp. (JFC) and Bank of the Philippine Islands (BPI). In particular, MBT received a minus 1.42-percent rating, a minus 1.66 percent for GLO, a minus 1.4 percent for JFC and a minus 1.59 percent for BPI.
Lepanto Consolidated Mining Co. (LC) and Universal Robina Corp. (URC), on the other hand, were given positive, though slight, ratings that helped their market prices to do better last week.
By the way, MSCI Inc. is formerly Morgan Stanley Capital International, which “provides indices, portfolio risk and performance analytics and governance tools to institutional investors and hedge funds.” Its international index like the MSCI World is “widely used as common benchmark for the ‘world’ or ‘global’ stock market.” It also releases the MSCI EAFE index, which covers 24 countries in Europe, Australasia and the Far East. The Philippines is one of the countries included in its MSCI (All Country) Pacific Index under the EAFE.
MSCI is a listed company on the New York Stock Exchange and is no longer a member of the Morgan Stanley group of companies.
A friend was opposed to the timing of the ratings changes. He believed that the changes issued affected the price of some stocks more than they should be affected. He cited the case of GT Capital Holdings Inc. (GTCAP). For the first half that just ended, the company reported a 136-percent increase in operating profit. Because of the downgrading of its affiliate MBT, its market price was “untimely” pulled down. Its fall contributed to last week’s overall market fall, too.
Of course, this was just an opinion. It’s just the same as the liberty that I believe I have in how and what I wanted to call the market last week.
FTI bidding winner
You already know who submitted the highest offer in the public bidding for the 74 hectares of FTI last August 14. This was Ayala Land Inc. (ALI). ALI bested the two other parties that participated in the bidding. These were Empire East Land (ELI) of realtor and gaming magnate Andrew Tan and Robinsons Land Corp. (RLC) of the John Gokongwei group.
In addition to ALI’s offer price being about three times the required minimum NPV bid of P8.01 billion, it also committed to give an upfront payment of P19.5 billion, which is about 81 percent of the total price tendered. Again, as observed, this was “about nine times the required minimum upfront payment of P2.2 billion.
Curiously, the four other pre-qualified companies reported earlier did not submit their bids. These were Century Properties Group, Filinvest Land Inc., Rockwell Land Corp. and SM Land Inc.
Based on the public bidding rules, ALI’s offer will go through a so-called post-qualification process. This means the Privatization Management Office (PMO) will go over the bid documents more closely before these are submitted for approval and acceptance.
It should not be a problem at all since ALI’s bid was clearly about P9 billion more than the next highest bid. But according to some, while the bid was good for the government and, therefore, not a problem at all, it looks ominously not for ALI. Old-timers recalled that when the Fort Bonifacio Global City was offered for public bidding, the price difference between the declared winner and second-highest bidder was no less than 65 percent more than the bid of the second-highest bidder, which was just about the bid differential between the two closest contending parties for FTI.
Given the parallelism in the bidding results together with the burden of the payment schedule—“the winning bidder has 60 business days to settle the upfront payment and 365 days (from bidding day) for full payment—along with the added load of the cash outlay needed to start the project, old-timers nurture the superstitious belief that the winning bidder for FTI might also suffer the same fate as the original winning bidder for the Fort Bonifacio Global City.
As you may remember, the winning bidder lost its financial footing. It suffered a financial slip-up. As a result, it lost the deal. Thus, rather than being emboldened now to buy ALI shares because of the bidding results, old-timers—based on this “superstition or coincidence”—are recommending the reverse.
Bottom-line spin
No matter what you might call or describe the market last week, whether you believe or not in superstitions or coincidences, it could be a part of the unfolding consolidation process now testing the proximity of the actual or intrinsic value of stocks to current market prices. And this kind of happening might go on until the Chinese ghost month ends in early September.
(The writer is a licensed stockbroker of Eagle Equities Inc. You may reach the Market Rider at [email protected], [email protected] or at www.kapitaltek.com.)
