Philippine Stock Trading Drops as Bourse Halts High Flying Stock

(Bloomberg) --

Daily trading in Philippine equities, Asia-Pacific’s second-worst performer this year with a 4.6% loss, has plunged from a record after the bourse suspended its most active stock -- Abra Mining & Industrial Corp.

Shares of unprofitable Abra Mining were suspended indefinitely amid a probe by the exchange and the regulator for alleged violations that include trading of unissued and unlisted company stock. The halt, since March 4, will last until the infractions are resolved, the bourse said.

While Abra Mining comprised 77% of the market’s daily transactions this year before the suspension, appetite for other smaller and speculative equities that had skyrocketed amid a buying frenzy by individual investors has also been quelled by the trading halt.

“The suspension exposes the risk of speculative stocks,” said Rachelle Cruz, an analyst at AP Securities Inc. “Some investors playing with speculative issues got scared and pulled out their trades.”

From a record 221.23 billion shares on March 3, the market’s volume turnover plunged to 2.69 billion the next day, when the trading halt was imposed. While volume reached 9.13 billion shares on Wednesday, that’s barely a fifth of average 50 billion shares that changed hands daily in the first two months of the year.

Abra Mining, which hasn’t made a profit in at least two decades, surged as much as 279% this year to a peak in January. While the share’s gain has since pared to 59%, trading volume still jumped to a record 215.45 billion on March 3.

The halt caught traders of Abra Mining by surprise. Danilo, an information technology professional, bought the stock expecting it would again soar.

“I hope this suspension ends soon,” said Danilo, who declined to use his full name. The halt is “a heavy squeeze on those who put in a big sum and chased the stock before the suspension. Many investors are trapped.”

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