Stocks End Down on PAL Worries

The Business Daily

Wednesday, December 9, 1998

Shares lost steam at the close yesterday as uncertainties over the rehabilitation ailing Philippine Airlines Inc. (PAL) and its effect on the banking sector dampened sentiment, dealers said.

The 33-share composite index gave up 18.51 points, or 1.01%, to 1,815.85.

“The Philippine market has outperformed other Asian markets over the past three months. This is simply profit-taking," said Fitzgerald Aclan, Assistant Vice-President at Orion-Squire Capital Inc.

"They (investors) are worried over the condition of PAL’s rehabilitation and how it might affect the creditors,” Aclan said.

PAL owes $2 billion to thousands of creditors, including suppliers.

The Philippines' ailing flag carrier announced on Monday it needed $150 million in fresh equity infusion, restructuring of debt and sharply downsized operations to remain financially viable.

Blue chips which yielded to profit-taking were phone giant Philippine Long Distance Telephone Co. (PLDT), real estate firm Ayala Land Inc. and power distributor Manila Electric Co. “B.”

But food and beverage conglomerate San Miguel Corp "B" bucked the downward trend, rising P4.00 to P64.

"We went up too fast, too soon in recent weeks. But we have nothing to worry, I think the (index) can hold at the 1,800 level," said Julie Villena, analyst at Magnum International Securities Inc.

Meanwhile, stocks opened higher in early trade yesterday as investors focused on index heavy-weights PLDT and Manila Electric Co. "B,” traders said.

Market sentiment was also boosted by the strong opening of the peso yesterday and the rise of the Dow Jones industrial average overnight.

The 33-share composite index jumped 12.52 points, 0.68%, to 1,846.88 after 30 minutes of trade at 0200 GMT.

"There's very little market-moving news except for the rise of the peso…and speculations on PLDT and Meralco," Jose Vistan, analyst al Dharmala Securities Phils Inc.

"On PLDT, it’s because of reports First Pacific is going to raise further its stake. On Meralco, it is because of talk of a possible take-over," Vistan said.

Philippine newspapers reported on Tuesday First Pacific Co. Ltd. plans to boost its stake in PLDT to more than 30% from the current 27.4%.

Traders said the market was also abuzz with speculation that Meralco might be the next possible target of a takeover like what happened to PLDT.

PLDT was up P5.00 at P1,025 while Meralco “B” was up P3.00 at P124 in early trade. — Reuters