Philippine Stocks Recovers Early Losses Amid Water Woes
(Bloomberg) -- The Philippines’ benchmark stock index shot up at the close to finish 1.6% higher, easing earlier concerns that regulatory risks surrounding water companies may wipe out all the gains this year.
The index recovered from losses of as much as 2.4% this morning, leaving the gauge up 4.1% for the year. Volume was at 123% of the three-month daily average.
The early losses were led by selling by foreign funds to avoid uncertainty as the government renegotiates the capital’s water contracts, AP Securities Inc. analyst Rachelle Cruz said. President Rodrigo Duterte’ will make an “important announcement” about the water concession set for January 6, according to presidential spokesperson Salvador Panelo.
Metro Pacific Investments Corp. and DMCI Holdings Inc., shareholders of Maynilad Water Services Inc., were among the biggest decliners, both falling as much as 5.6% on Friday. Manila Water Co. also lost as much as 6.8%, while power distributor Manila Electric Co., another heavily-regulated company, was down 8.1%.
Analysts are attributing the late session bounce to window dressing before the year is out.
“We saw the big index names ticking up about 15 minutes before the close as investors mark-to-market ahead of the year-end,” said Matthew Cabangon, president at AAA Southeast Equities Inc.
He added the year-end buying will unlikely stir up the market in the last three trading days next week in the country. With regulatory and political risks in the Philippines adding to broader concerns over global growth, “I’m afraid our market could be experiencing a de-rating in valuations as we head into 2020,” Cabangon said.
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