Philipines Market Insights 2018.7.4
News Highlights: Rout in tech shares caused major U.S. benchmarks to fall (DJIA -132pts, Nasdaq -65pts), while regional marts were mixed on lack of new trade-related headlines. Meanwhile at home, the DOF sees June inflation hitting 4.9% vs. 4.6% in May; the DOE said 4 big coal plants set to start in 2019. MPI’s Indonesian tollway unit prepares tender offer; CLC said PCC voiding of Trans-Asia buy-in had no basis; CNPF sees single-digit earnings growth in 2018.
PSEi rounded on plus side at 7,267. The market scored on the plus side despite thin trades, mostly on select stock plays. PSEi finished 39 points up at 7,267 (+0.54%), primed by holdings (+0.92%) & industrials (+0.6%). URC (+P2.80 at P124.80); SM (+P15 at P915); & BPI (+P0.70 at P88.20) led actively-traded shares. Turnover paled at P4.4bn, with gainers-losers at 88-97. Net foreign selling was still present at P425mn.
Selective, light, sideways. Non-index plays might highlight Wednesday’s session, with several fund managers on their 4th of July US Independence Day break. Any intra-day rally might be used as exit window for players likely to exercise caution ahead of the US’ stance on tariffs on Chinese goods on 06 July (Western time), plus June’s official inflation on Thursday. Trading activity is also seen to stay light. Continue to trade selectively, within range. Immediate support 7,200-7,230, resistance 7,300.
Region mixed. Asian marts were broadly mixed Tuesday following no new headlines concerning US-China tit-for-tat tariffs set for motion in the upcoming week.
Wall Street down. US equities fell ahead of the 4th of July holiday, led by tech shares. Facebook was down by more than 2%, on Federal probe on its data breach with Cambridge Analytica. DJIA -132 points, 24,174 (-0.54%), Nasdaq Comp. -65pts, 7,502 (- 0.86%).
Oil closed higher. Oil prices rose to a session peak of $75.27/barrel before closing at $74/barrel as tough sanctions by the U.S. on Iran loom & markets get more concerned on tighter output amid Libyan & Canadian supply disruptions. West Texas Intermediate (WTI) rose $0.61 to $74.55/barrel.
Indonesian tollway unit of MPI prepares P5bn tender offer:
Metro Pacific Tollways of Metro Pacific Investments Corp. (MPI), said unit PT Metro Pacific Tollways Indonesia (PT MPTI) raised its stake to 53.26% via a P597mn cross sale at the Indonesian Stock Exchange. As a result, PT MPTI will hold a P5.29bn tender offer (or P0.79/share) & will finance this via bank loans.
CLC says no basis on PCC’s voiding of Trans-Asia buy-in:
Phil. Competition Commission (PCC) voided Chelsea Logistics Holdings Corp. (CLC)’s purchase of Trans-Asia Shipping Lines due to failure to notify PCC about the deal. This is on top of P22.8mn violation fine. CLC argued that Trans-Asia’s NAV was below the P1bn threshold, as the latter had debts on its books. CLC & Trans-Asia, are weighing options whether to file a Motion for Reconsideration (MR) with PCC or go straight to the Court of Appeals (CA) for redress. Meanwhile, PCC gave ‘conditional clearance’ of CLC’s takeover of KGLI-NM Holdings’ block in 2GO.
Single-digit growth in earnings seen by CNPF, sets higher capex for 2018:
Century Pacific Food, Inc. (CNPF) plans P1.5bn-P1.8bn in capex for 2018 (vs. P1.1bn-P1.5bn in 2017), to support capacity expansion. Its GenSan tuna facility is seen to be completed 3Q19. The firm sees singledigit growth in earnings due to rising fuel costs & raw materials.
DoF flags higher June inflation:
DoF sees June inflation hitting 4.9% vs. 4.6% in May, due to higher vegetable & sin products plus education costs. BSP sees inflation averaging 4%-4.5% for 2018.
New coal plants to start in 2019:
The Energy bureau (DoE) said 1,550MW supply will be on stream in 2019 with 4 big coal plants set to start commercial operations: 600MW GNPower Dining Coal in Bataan; San Buenaventura Power’s 500MW in Mauban, Quezon; AES Masinloc’s 300MW in Zambales; & SMC Power’s 150MW in Limay, Bataan.
CWP to announce JV partner & contractor for Coron theme park:
Coral World Park (CWP) Undersea Resorts sees to complete its $250mn leisure & tourism project in Coron, Palawan in 2021. Of the 400ha., the 1st phase covers luxury & budget resort plus 100ha. theme park. CWP will enter into JV for the project & will announce developers that would handle construction of the theme park.