Ayala block sale drags market lower

The local stock barometer slid to the 7,800 level on Wednesday, weighed down by a discounted block sale of conglomerate Ayala Corp. shares and concerns on SM Prime Holdings’ much-awaited Manila Bay reclamation project.

After clinging to the 8,000 level in the last two trading days, the main-share Philippine Stock Exchange index (PSEi) lost 148.72 points or 1.86 percent to close at 7,864.70.

There was a selldown of equities across all counters, but the most battered was the property sub-index, which tumbled by 4.49 percent. Property giant SM Prime lost 6.92 percent on concerns that its Manila Bay reclamation project might be derailed.

A radio report quoting an official from the Department of Environment and Natural Resources said all Manila Bay reclamation projects might be rejected if proven that these would be harmful to the environment.

The Manila Bay project has a big impact on the market’s valuation of SM Prime because all analysts had already priced this into their fair value estimates of the property blue chip, a veteran research analyst said. As such, the market is now factoring in the possibility that the project may not push through.

Value turnover was heavy at P20.15 billion, bloated by a P11.7-billion block sale of Ayala Corp. Japanese conglomerate Mitsubishi Corp. sold another 13 million common shares of Ayala at P900 each, a 7.26-percent discount to Tuesday’s close.

Ayala, the day’s most active traded company, slid by 5.31 percent to close at P919 a share.

With the block sale, Papa Securities analyst Gio Perez said it did not look like the PSEi would be seeing the resistance areas of 8,100-8,200 soon.

The last time that Mitsubishi unloaded a big block of Ayala shares—referring to the placement in March last year—Perez noted that sentiment was highly bearish, a contrast to the more upbeat mood this 2019.

“With the large NFB (net foreign buying) we’ve been seeing recently, some might take the dip as a chance to enter, albeit at lower levels,” Perez said.

On Wednesday, however, there was net foreign selling of P1.19 billion. There were 127 decliners that edged out 64 advancers, while 50 stocks were unchanged.

By counter, the holding firms subsector also slipped by 1.8 percent, while the industrial counter also declined by 1.32 percent. The services and mining/oil counters also dipped.

Aside from Ayala and SM Prime, the day’s two most actively traded blue chips, investors also sold down shares of Ayala Land, which fell by 4.22 percent.

SM Investments, Jollibee and Meralco all declined by more than 2 percent. BDO and JG Summit both fell by over 1 percent, while AGI and SMC also declined.

One notable decliner outside the PSEi was Megawide, which lost 4.44 percent.

Meanwhile, ICTSI gained 2.44 percent while Metrobank and GT Capital both went up by more than 1 percent. URC and BPI also firmed up.