Philippine market pulls back on sell-off of EDC shares

MANILA, Philippines—The local stock market faltered on Monday, weighed down mostly by a sell-off on shares of Energy Development Corp. following reported delays in the rehabilitation of the geothermal power producer’s Bacon-Manito (Bac-Man) plant.

The main-share Philippine Stock Exchange index shed 35.4 points, or 0.76 percent, to finish at 4,644.49 as jitters over EDC triggered selling pressures. On the other hand, Monday’s report about the sluggish 3.7-percent fourth-quarter Philippine gross domestic product had very little effect on the market, dealers said.

“GDP was in line with expectations and not a reason for today’s drop,” said First Metro Securities president Gonzalo Ordoñez. “Extended postponement of BacMan operations triggered EDC’s descent, the biggest contributor to PSE’s negative move.”

Ordoñez said the drop in US futures further dampened market sentiment. As of the local market’s closing on Monday, the Dow Jones Industrial Average futures index was down by 68 points.

Shares of EDC, the most actively traded company, fell by 10 percent to P5.66 each. EDC confirmed reports that it had decided to “effect further repairs on defects that were detected during the commissioning period” of BacMan. It said these repairs would be completed within the third quarter.

“I don’t think the sell-off today had something to do with lower-than-expected (Philippine) GDP results,” said CitisecOnline.com president Conrado Bate. “The market has had a good run for most part of January and was due for some profit-taking.”

All counters ended in negative territory except for the services sub-index, which was aided by a more stable trading on PLDT.  The industrial and mining/oil counters posted the steepest decline of 2.6 percent and 1 percent, respectively.

Value turnover amounted to P7.32 billion. There were 48 advancers, which were overwhelmed by 113 decliners while 42 stocks were unchanged.

The decline in EDC, which has a 3.3 percent weight on the PSEi, also dampened trading on its controlling stockholder First Gen and their ultimate firm FPH.

Investors also traded lower shares of the following companies: Metrobank, Megaworld, AGI, Ayala Corp., Jollibee, BDO, Petron, SM Investments, Philex, ICTSI, DMCI and Metro Pacific.

Meanwhile, apart from PLDT’s firmer share price, the PSEi’s decline was tempered by the gains of BPI. The country’s most valuable bank reported on Monday a 13.4-percent surge in 2011 net profits to a record high P12.8 billion, outperforming market expectations.

Security Bank also edged 1.4 percent higher likely in anticipation of robust 2011 results.