Shares Snap 4-day Rally as PLDT, Dow Decline

Today
Saturday, September 19, 1998

SHARES took back their gains on Friday from a four-day winning streak driven by a reversal in blue-chip Philippine Long Distance Telephone Co. (PLDT) and the Dow Jones' overnight drop, traders said.

"The rise in PLDT in New York was not commensurate to the P200 jump [in PLDT} yesterday....The weak hands just started selling today," said Francisco Liboro, General Manager of PCCI Securities and Brokers Inc.

The 30-stock composite index sank 94.63 points or 7.46 percent to close at 1,174.61, wiping out its gains on Thursday.

"If it weren't for PLDT, our losses would have been just 3 to 4 percent," said Allan Araullo, Vice President of Regina Capital Development Corp.

Despite its losses, the main index was up 8.5 percent or 92.43 points higher from last Friday's close of 1,082.18.

A total of 2.83 billion worth of shares changed hands in the market with more than 60 percent of trades accounted for by PLDT.

Losers outstripped gainers by a margin of 3.3 to one.

"If you look at the numbers yesterday, 78 percent of the rise was due to PLDT. Technically, it looked good because there was volume....But then 78 percent in all but one stock, that's very dangerous," Duero said.

PLDT's American Depositary Receipts closed overnight in New York with a slight gain of $0-13/16 to end at $19-7/16 despite its sharp rise on Thursday.

Investors took this to mean foreign investors were not as excited about speculations over alleged takeover bids in the country’s main carrier.

“That frightened off a lot of followers. But I don't think it frightened off the real buyers yesterday,” said Liboro.

PLDT closed 17.24 percent lower, or P175, at P840 but some buying pulled it up from the day-low of P785.

"It's a strong recovery from a low of P785. That's because the stronger hands are coming back in because they really want the shares. I think there really is a groundswell of serious buying," Liboro said.

The 2.67-percent slide in the Dow Jones overnight also dampened investor sentiment, analysts said.

"That's the only market now that is supposed to be guiding the rest of the world in terms of strength. So there is a psychological effect," Liboro said.

State-controlled Philippine National Bank fell 5.26 percent, or P1.50 to close at P27 on fears over its exposure in flag carrier Philippine Airlines Inc. (PAL).

PAL announced on Thursday it was ceasing operations by midnight of September 23.

"In terms of sentiment, the development with regard to PAL is weighing down PNB. Their exposure in PAL is quite substantial. And fundamentally, PNB is weak," said Jasmine Juanico, analyst of Anscor Hagedom Securities Inc.

PNB is PAL's single biggest local creditor.

Holding firm Ayala Corp. shrank 15 percent, or P0.75, to P4.25.

Analysts said PLDT will continue to dominate trades next week while the rest of the market will be moving sideways.