The Philippine Stock market fell below the 7,000-point level on Thursday on the disappointing first quarter performance of the Philippine Long Distance Telephone Co. (PLDT), as well as growing uncertainty before the May 9 presidential elections.
The benchmark Philippine Stock Exchange Index (PSEi) fell by 1.16 percent or 82.11 points to close at 6,999.75, while the wider All Shares dropped by 1.04 percent or 43.76 points to end at 4,162.12.
Joseph Roxas, president of Eagle Equities Inc said that the main index was pulled down by the weak first three-month performance of PLDT (TEL).
“I think this [drop]is mostly because of the PLDT problem. PLDT’s performance has been cooling down the local bourse,” Roxas said.
Roxas explained that TEL carries the largest weight of the PSEi.
On Thursday, TEL was one of the most actively traded issues, shedding 69 points or 3.94 percent of its price to close at P1,681 apiece.
On Tuesday, PLDT, partly owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT group, reported that its net income from January to March fell by 34 percent to 6.22 billion from P9.48 billion year-on-year.
The company blamed the decline in net income during the period to higher product subsidies and financing costs, and increased impairment charges related to its investment in Rocket Internet.
Brokerage firms did not expect the substantial fall of PLDT’s first quarter net income as the consensus stood at P7 billion, with a few forecasts of even higher income.
PLDT likewise lost 350,000 to 400,000 subscribers during the period.
“They have to get that back, moving forward. They have to look at their deal with Rocket Internet if it’s beneficial to them,” one analyst said.
Meanwhile, Luis Limlingan, business development head at Regina Capital Development Corp., said that Thursday’s fall was attributable to profit taking, as the market reacted to dismal earnings reports from some companies.
“Also, the profit taking was caused by private payrolls going lower in the US,” Limlingan said.
Both analysts agreed that pre-election jitters kept total value turn over weak at P5.634 billion.
“The low trading volume and value turnover are expected each time a presidential election is being held because of the uncertainties brought by the transition from incumbent to incoming administration. Just like what happen during Erap’s [Joseph Estrada] time, but thereafter the market picked up,” Roxas said.
All the sub-indices ended in negative territory led by the services sector where TEL is listed shedding 1.65 percent. Declining issues outnumbered gainers, 121 to 58, while 46 were unchanged.